From what I'm seeing, this seems to be an issue on Snow Leopard with how the vector smilies work... it won't resize them once they've ever been sized differently by the remote end sending a different font size. This means if you've had them sized smaller once, they won't resize larger. Very odd. On Leopard, however, it seems to work fine.
I may just turn off the vector smilies and use bitmaps instead.
No, I rewrote the vector smiley code so it can do proper vector resizing on both Leopard /and/ Snow Leopard. Had to redo things to account for the Snow Leopard caching logic.
I've noticed on Snow Leopard as well. I have one friend I chat with who uses larger font. After he sends me a few "LOL" or smileys, they come through larger and that's when they get distorted. Glad to see this should be fixed in the next release.