Sorry, missed that topic... You should nudge me by PM for any topic you haven't seen me comment on and you need feedback on ;)
I'm not against the idea, I'm against not having a UI for that later... (BBCode :P)
But yep, older versions of IE either don't support data-URIs at all (Wedge redirects IE6 and IE7 to the physical files), while IE8 (or was it IE7? Probably IE7) has support for them, but no more than X bytes, probably 4K I think. Most smileys are under that range. Wedge accounts for this anyway by, IIRC, automatically redirecting to the physical file is the smiley is very large -- because the advantages of having an overall single file for smileys are totally destroyed by having a LARGE file. ;)
So, yeah, it's unlikely that your suggestion would be good in the long run. I can live with knowing that IE6 won't see any smileys at all (what did they do to deserve them anyway? :P), but I can't live knowing that people will have to download a 2MB smiley file because the admin decided to post a lot of animated lulcatz as smileys.
:edit: I'm not sure Wedge also sorts out the smileys that are 'hidden' by default. It would be smart not to include them in the smiley file, I'm guessing, because most likely they won't be used a lot...