Upgrading the (already pretty awesome) avatar limits would reduce the available space for poasts themselves (plus require a layout edit due to the text jumping bug thingy we had earlier), but it could be done if there's enough demand for it.
I'm not in favor of it though, my Cthulhu avatar works, and that's all that really matters,
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Edit: I've edited some settings. Oversized avatars (and maybe undersized ones?) were resized using HTML height and width tags, guess that didn't work properly
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I've changed the setting so that oversized avatars get downloaded onto TLS, resized, and used on there. There's no bandwidth or storage limit on this host, so it doesn't make any difference to us.