>Does it shrink an icon the way the ImagEdit program does? I've seen a couple and they don't provide that functionality.

The version I've used does. It supports multiple formats in a single icon file, as well as custom user defined sizes. If you have a 48x48, copy it to the clipboard and paste it into a 16x16 you have the option of shrinking or leaving the original size.

I've been using axialis AX-Icons lately. It can do the same thing, but I think it has better support for saving as a .bmp. You can dl it at http://www.axdn.com/

I have used ImageEdit myself, but the MA and AX and built specificaly for creating and editing icons. :)