thanks for sticking with this topic, though i have to confess that it's not a big deal. i end up with something kind of like what you suggest, only i simply create an appropriately sized image from the get go, rather than appending (your steps 1 and 2). perhaps appending is much faster?
my biggest problem is actually that photoshop compressed png's get mucked up somehow, and when i past a masked icon on top of the image it comes out noisy. it's as though white is used as the transparency color, even though that part is not supposed to be transparent. works fine on pngs created using open source image programs.
photoshop is known for ignoring image formats in favor of proprietary formats, so perhaps that's the problem. perhaps it's the compression. unfortunately, i expect users will use photoshop a bunch. i'm not sure how to test for position failure, though, so it's a sticky situation.
the final images have to be les than 800kb, so compression is likely.
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