Good discussion on what is a copyright pertaining to images. I appreciate dh003i keeping things intellectual, above the rock-throwing level. I think it's important to hear these views, because as he says they are shared by many of the youth of the world, and many in poor countries.
I'm not saying I agree that images should be a free-for-all. But proportinality does need to be considered. How much "loss of income" would occur if a website uses your image? Would it stop sales? Slow them down? Do you even sell softcopy images?
Supply and demand should also be considered. How many alternate pictures are available, for free? Could I charge "art rate" for an image that is used for "website design?"
What about intent? Does the church site expect to make money off your image? Will more people join, and send them money because of a nice image.
I'd stick with explaining the copyright rules as you've done. After you've implied that you could have been paid for the use, and now they're willing to pay, why punish them? To "teach a lesson" that they now already understand?
I'd wager the market for selling medium resolution images is pretty slim, so when I post something I do it smallish. If someone wants to use the image, credit would be nice, to drive business my way. If someone wants a nice print or original plate they have to pay for that.