I personally would send it. My baby's head only came up halfway on the photo and the check and send at the Westminster Bridge Road PO told me it would not be accepted. I sent it anyway 'at my own risk'' and received the passport only a few days later (albeit with a terrible photo).
In any case, unless you are in a rush, if the application isn't accepted in the first instance the passport office will ask for additional photos.
I just did mine and the two photos are so different I wondered if I should get it counter signed, but it came back no bother. I suspect the staff at the post office are ultra cautious as you are paying them to check everything is exactly right (as they should be of course) but the staff at the passport office possibly aren't as careful. As long as they don't send the whole application back, when it would be another two pounds for another registered letter, you can't actually lose out as you won't need to send the photos by registered post.
My passport came back by bike courier, which I thought was quite cool and I actually look better on the passport than on the set of photos, where I look like a war criminal. The new passport design is all shiny and nice, with a lovely picture of some houses on the inside cover. I don't know what it means, but I'm all biometric now.