A normal picture at 125*125 won't exceed the size limit, only an animation. Roaches avatar is exactly 125*125, so thats a big as you can get, but any normal member could have the same avatar.
In theory, an admin could use any image as an avatar, except it would just mess up the skin and all of the other graphics would be bumped out of place. I was tempted to upload an animated 125*125 infernal once, but as you can see I resisted =). I dont remember any case every where a mod or admin ever ended up with an avatar a normal member couldn't have.