I recently received some advice on gnu.emacs.gnus on how to get this working. However, I believe that the specification of the Face: header is wrong in one respect. It states that, because of limitations on how large a news/mail header can be and the base64 encoding that is used, the png image can be at most 740 bytes long. As luck would have it, the 10-colour version of the 9-colour image that I have in this image is precisely 739 bytes. When I base64 encode it I get a header that is too long. A suitably modified version of the make-face shell script seems to agree with me as well. It seems that the calculations here need to be redone.