It is proposed that the gamma-ray burst (GRB) photons near the peak of the
spectrum at several hundred keV are produced on very compact scales, where
photon production is limited by blackbody effects and/or the requirement of
energetic quanta (E > 2m(e)c(2)) for efficient further production. The fas
t variation of order milliseconds in the time profile is then a natural exp
ectation, given the other observed GRB parameters. Analytic calculations ar
e presented to show that the escape of nonthermal, energetic gamma rays can
emerge within 1 s of the thermal photons from a gammasphere of below 10(12
) cm. The minimum asymptotic bulk Lorentz factor in this model is found to
be of order several hundred if the photosphere is of order 3 x 10(11) cm an
d greater for larger or smaller photospheric radii. It is suggested that pr
ompt ultra-high-energy gamma rays might provide a new constraint on the asy
mptotic Lorentz factor of the outflow.