You can also use PNGs and GIFs, I think.
If you give me the original avatar, I can fix one up for you - I can adjust the quality levels in the GIMP, so I can have it the best quality at exactly 3.9 KBs or 4 KBs - in paint, you can only save it, not adjust the levels. It makes a huge difference.
RegentMan: any particular colors? I'll see what I can come up with...