I have the same problem. What I try to do to fix it is to use the "fix/enhance" tool in Walgreens.com or snapfish.com. There is a red-eye option there.
On another note, it is by using those programs that I upload so many pics onto binkbunny.
I don't have a color printer at home for photos, so I get them printed out at my local walgreens store by emailing the pix to them. It seems to be cheaper anyway at only 0.19 cents a 4x6 inch pic.
So since they are already hosted on the walgreens server, I just right-click the pic I want, and click "copy".
Then I go to another open browser with the binkybunny page open, and directly into the body of what I'm typing in the reply field, I hit "Ctrl + V" and it pastes the pic right into my post.
Regarding the red-eye, the walgreens or snapfish method always removes it, however I can't figure out what to do with the "white flash" in the eyes! I guess you could open each individual pic in Microsoft Paint, and edit them each yourself, but that would be too much of a pain.
Here is an example, but I wouldn't bother doing this with every pic.
Fixed eye thru MS Paint
Doesn't it make him look a bit creepy?