ArcaOS allows the users to use either PNGs or icons for each folder.
In Arca, for each folder one has the option of using the standard icons or dynamic icons (pngs). One can set their dyanmic icons from 16x16 up to 80xx80. Up to 40x40, I continue to use the os//2 icons. Above 40, I can assign a PNG for the dynamic icon. If no dynamic icon (png) is assigned, then it resizes the os/2 standard icon. However, if an icon has both a normal os/2 icon and a dynamic icon assigned, and dynamic icon selection is enabled, it will always use the icon selected for dynamic icon.