Selective image compression?
To insert a JPEG image into another without recompression, you can use a jpegtran version with crop 'n' drop. It is safest to insert into coordinates that are multiples of the 16x16 pixel JPEG block size. On command line:

jpegtran.exe -drop +16+16 pixelated.jpg piano.jpg out.jpg


pixelated.jpg

piano.jpg

out.jpg

Difference images made in Gimp show only black, so there was no lossy recompression.

Difference image: piano.jpg vs. out.jpg

Difference image: pixelated.jpg (aligned) vs. out.jpg

Before all this, you can use

jpegtran -crop 


to copy the target region in the big image to a file for modification.

I wonder if jpegtran can handle your huge files. My test files were quite small.