There isn’t room to store 400KB, or even 100KB, in the imp. But if the still can be streamed out of the camera peripheral (i.e. if the camera doesn’t really mind how slowly the data is asked for) then yes, the imp could stream it straight off to the cloud for actual processing.
How big a chunk can be stored on the imp before it needs to be uploaded? Having the capability to periodically take and upload a single small picture would be useful to me.
The imp has about 60Kbytes RAM available to Squirrel. Given the other bits and pieces that might be involved in getting data to and fro, you should probably be able to store a 30-40Kbyte image.