Hi Jason,
Yes, the uploadable user_icon has admin settings to enable/disable, to specify the maximum filesize (in bytes), and to specify the maximum width and height the icon can be. If an icon exceeds the width/height limit, it is scaled down proportionally. In other words, If I upload a 200w x 100h image, and the maximum width is 100 (the default), my image will be displayed at 100 x 50. The image stored on the server isn't resized, it just uses width= and height= tags on the image to have the browser resize it.
Jason Rhinelander
Gossamer Threads jason@gossamer-threads.com