In answer to my own question if anyone else needs the same thing I found a mod on phpBB that uses javascript to resize remote avatars:

[phpbb.com...]

In admin panel you can specify the allowed dimensions. I have few suggestions here.

Do not allow external images only allow internal images.

1) Image space consumption is very cheap
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Lets say you have 10000 members each with 100 kb avatar. So you have 1000,000 and thats make it just 1000 mb or 1 gb which is very cheap to get when you have a 10,000 members (even your adsense will be able to earn more than that).

2) Performace increase
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Internal images will enhance the forum performance and it is the most imp factor for forums.

The above two points tells me to have only avatar galley and internal image facility.

Thanks,
AjiNIMC

Personally, I would restrict avatars, period.

With a noose, if necessary.

I will only allow external images for the simple reason that it will not chew our bandwidth, disk space is not an issue, bandwidth is.

We are not running adsense on the forum as it performs very badly on forums.

I didn't want avatars period but the community insisted.

I will only allow external images for the simple reason that it will not chew our bandwidth, disk space is not an issue, bandwidth is.

Performance Vs Bandwidth - Bandwidth is much cheaper than performance in my opinion.

I didn't want avatars period but the community insisted.

Do you mean disabling avatar for initial x post or x days? I have never tried it. How does this help?

Regards,
AjiNIMC

It seems like allowing external images is kind of risky - someone could change an avatar to an adult image, spam ads, etc. at any time.

One thing that some sites do is stick image hosting on a second domain with its own bandwidth allocation. This keeps bandwidth down for the primary domain.

If necessary, you could also specify a single avatar size and hard-code those dimensions into the template. Anyone who linked to an avatar of another size would have it displayed at your dimensions. Certainly, setting a max value in the control panel would be more convenient and elegant.