I have had a reply from Rootsmagic regarding this issue:
Michael,
Sorry to take so long to get back to you. Sadly, the answer is with the Ancestry API that the upload of media is all or nothing. You would physically have to remove the media from the Media Galley so it doesn’t upload when creating a new Ancestry tree or adding a new person or source that has one. We have a request to be able to privatize media so it cannot be uploaded, and hopefully that will be possible one day. We don’t have a lot of control over the Ancestry API since Ancestry is the one that builds and maintains it.
So it looks like the only way to avoid loading 1000s of images is to use a workaround like the one I described above not ideal but it does work.