Yes Badg3r, What you said totally makes sense. I do save my tiffs with compression (LZW). But when I save them without any compression, the tiff renders in mental ray. My texture files grew a bit larger as well. (a small price to pay).
If I am not using the Alpha channel and my character will be viewed from far away is it best to use JPEGs?
.....Is it legal to use jpegs at all in 3d?

Thanks for the help.