@modified: Nope, no image processing is done on 'classic' files. IMHO, it's much easier/faster to batch process your files yourself before putting them on your device. (Look at the cover-extract script to see how it's done with ImageMagick).
That said, with the new launcher, I guess it would be fairly easy to create a simple script to process the screensavers folder
It would just take a crapload of time, depending on the number of files.