Essentially, I am going to have to make four different size icons for each PNG which requires a lot of touch up.
In general: if a 80x80 icon looks great, but a converted 40x40 or smaller icon is quite ugly, is it your policy to use 2 different images then?
Essentially, anything in PNG format looks good. In OS2 icon size, 40x40 gives the best result. I usually create four pics for one icon:
16x16, 20x20, 32x32, 40x40. Some people just create one icon 40x40 or 32x32 and let OS/2 do the resizing. My observation is that OS/2 does a poor job rendering to smaller sizes. That is why I create four and try to touch them up somewhat before making the final icon. This still is not great. That is why I like PNGs and replace most of my OS/2 icons with Dynamic icons in ArcaOS. Also, OS/2 renders light colors on the outside of the icon as white. It is not noticeable unless one puts the icon on a dark backgrond. Another reason I try to retouch individually.