Wow, I can't imagine that any engineer who was able to get hired by HP
wouldn't understand why JPG isn't appropriate for screen shots or other
line art. (or anything else that isn't a continuous-tone natural scene,
which is what JPG was designed for, and the only thing for which it
works well)
The options weren't great back then, unfortunately. The .PNG spec was brand new and hadn't caught on yet. Unisys was shaking everyone down for royalties on the .GIF patent. I'm not sure .BMP existed at that time -- I believe it did, and it would have worked, but it was mostly a Windows-specific format. Dunno if the Unix and Mac people would have been happy with that. .TGA and TIFF would have worked but the files were large and cumbersome, and as I recall they weren't used widely outside the desktop publishing business. .PCX and .LBM would have worked well since RLE compression is a good fit for this type of file, but again they didn't have a lot of support across different platforms and industry sectors.
So that left .JPG. While definitely not the 'right' format, if you crank the quality level up high enough, it could yield tolerable results, and unlike .GIF it could be freely implemented. Arguably HP should have paid the danegeld for the .GIF license and called it good, but it's hard to second-guess them at this late date.
-- john, KE5FX