Well, it's not the best example, but...
Here is the Earth:
Apparently the Earth is 29 KB in size. This must be part of Spore or something...
If a user just wanted to resize this image, they could go to ResizePic.com and bring it to a 100x100 JPEG that easily fits within the current rule limit at 3 KB:
However, let's say that they wanted the background cut off and made transparent. Well, since the Earth is a circle, it's really easy to cut out the background and save it as a transparent PNG. Here are the results:
The Earth is now 21 KB in size, which would be even over the current proposed rule limit (unless we're shooting for 25 KB).
Since JPEGs don't save with transparency, we're left with three options: save it as a GIF, remove some color channels from the PNG, or shrink it.
Shrinking is for losers who don't like their home planet nearly breaking the rules, so let's try a GIF:
It fits within the limits, but as you can tell, GIFs aren't too good with anti-aliasing. Rough edges are for losers who think that their home planet is made up of a bunch of noticeable pixels.
So in the end, if we wanted to retain anti-aliasing, we could use the posterizing tool to remove unused color channels from the PNG file to shrink its size. It doesn't always work efficiently, and determining the filesize can be more of a guess-and-check since I know that at least The GIMP doesn't give you a preview filesize. So after five extra experimenting minutes on an image that took me thirty seconds to originally make, I come up with this:
Sexy, but you can still see a minor lack of quality shine through within the Earth portion of the image. It still looks a lot better than a GIF file, though.
Again, this is not the best example, but there are many other situations that this could be implemented in. Say, for instance, someone had an avatar that was text-based with some transparency thrown in, and it was also in color. This could potentially break the 10 KB limit, and shrinking the image or making it more jagged could be bad for once-readable text.
The issue always pops up when I'm making avatars for people. Most of the avatars that I've made here are originally around 18 KB in size, so chipping off 8 KB of such a tiny image seems kinda silly. Upping the limit to either 20 or 25 KB could reduce problems with images like these, and it would definitely not slow down your page loading a considerable amount unless your internet was in a very bad shape.
This isn't really too important, but it'd just make things a bit simpler for the Forum.