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You can significantly reduce the size of the DLL by modifying the icons to only include sizes/colordepths that are actually used by Windows. Enabling PNG compression also helps a lot.
Useful sizes are:
256x256 (XP colors)
48x48 (XP colors)
32x32 (XP colors)
32x32 (256 colors)
16x16 (XP colors)
16x16 (256 colors)
With this you can fit 40+ icons in less than 2 MB!
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