HappyIcon

From Logipole:

HappyIcon is an icon, cursor and animated cursor creation tool using photos, animations, pictures or scannered documents. HappyIcon creates icons or cursors including several formats (from 16x16 to 96x96) with colors or not (from 2 to 16 millions). You will be able to transform your favorite photos and display them on your Windows desktop as small or large icons or even as mouse cursors. The background of the icons/cursors can be or not transparent, with the colour you want. In the visualisation window you will be able to colorize, modify, apply filters (blur, contrast...) and special effects (swirl, implode, wave...) A very useful built-in utility allows you to custpmize the system icons, as well as the system cursors. It can also attribute an icon to each folder (you must have IE4 or more installed).