Lets you replace a bookmark's icon / favicon. Right click any bookmark, select "Properties", then "Browse". (Mac users do this from the bookmarks sidebar - Command+B).
--> works with many image formats (jpg, gif, png, bmp, etc) as well as .ico files.
--> any image size can be used (they still display as the small size).
--> get images from a url (Windows only) - click "Browse" and paste in an address like http://www.cnn.com/favicon.ico
or if a page has an image you like, right click on it and select "Copy image location", and paste that in.
Be sure that both options are left UNchecked: (Tools->Add-ons->Extensions->Favicon Picker->Options).