We're also in the middle of early growing pains figuring out skins and their effects on mobile/phone users and making things work; after that we can certainly branch out to rectangular and more stylishly proportional ones. Also definitely contest points/coins will be used in the future to get bigger/larger avatars and other special effects for a month or two and users can do that when we have this all hashed out.
Middle ground: 150x200 or 175x200 300x300 would definitely slow site traffic to a crawl with so many massive avatars even if you have high speed internet
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