Just a note on LFS World's compression to 400KB:
Try to make your skin slightly less than 400KB so that LFS World isn't compressing it at all. Your graphics program should do a better job of the compression and the file should then be better quality.
As Becky Rose suggests, Give your skin directly to your friends so that they have the full 1024 x 1024 version. Other people can get the resized version from LFS World when they meet you in-game.
The size needed to upload to LFS World is 1024 x 1024 pixels. LFS world will then resize the skin to 512 x 512. If the skin is over 400KB LFS World will also compress it (try to avoid that).