Hi,
FWIW... back when I did some more website stuff I used to use "MicroAngelo" (win-based freeware IIRC).
I checked tons of tools back then and this was creating impressive scale-downs even from larger originals.
IBManners: Sorry for the watoday and spamcop examples, but these are not on-the-fly "scaled-down" representations of larger pictures.
A standard scale-down would result in a smaller representation of the SAME picture while in your examples, the small pics are whole different from the large pics (i.e. they show a different graphic). with these ICO files instead, the browser picks the 16x16 image from the list of formats contained in the ico file. (Sorry if that is what you said and I simply got you wrong...)
A lot of people tend to forget that "ico" is not a graphics file format - it's a "container" format to put it that way.
It can contain multiple images which differ by size, resolution and also actual picture. An application using the ICO can decide which one to pick, depending on size and color-depth. This is also true for OS/2's WPS:
Watch for programs that have an icon on the desktop and what is displayed in their titlebars when they're run. Both pictures are contained in the same .ico file.
Basically, my experience is:
You can do a whole lot of good stuff with only 16x16 pixels. But not, if you also only have 16 colors.

Make sure you've got 256 colors (at least) at hand, otherwise you'll not be able to create anything close to pretty.
Hope this helps, cheers,
Thomas