And I could have sworn I saw the problem on my Mac, but then not.
Since Paul gave us the info on powers of two, though - I could have just been accidently testing with a grapic that WAS sized in powers of two, and then with one that wasn't.
I will do some more testing though. And yah, DVader, good catch, it could be the same on all the transmissions.
EDIT: Well, it seems to have worked! I increased the size of the image to 1024 x 1024 and my iPad and iTouch display the characters correctly. And since I just added some empty space, the file size barely increased at all.