Here's a summary of a conversation between Mr. @Sauce and I had regarding team selection logos. This is the basic outline of the method that I use. Some manual cleanup is still often necessary but it generally gets me a workable image and some consistency. This is just the method that I use, I'm all ears if anyone has other thoughts. I am in no way, shape or form a graphics expert. In fact the below lists the sum of my knowledge of using GIMP. Only figured out enough to accomplish what I wanted to do with reducing the palettes.
1. Download logo from www.sportslogos.net. I like using the small 150x100 .gif files because they're already sort of preshrunk and they are also in the right proportions for using as center ice logos. More on that later.
2. Using Paint, I shrink the image to a maximum height OR width of 46 pixels (depending on orientation) in order to give a minimum pixel border on each side. Regardless of how you want to crop, resize to 48x48 and save as a 24-color .bmp. I also take out any TM or R marks at this point because they're too small to see at scale anyway.
3. Using GIMP, I open the file and convert to an indexed image. Image => Mode => Indexed.
4. There are 9 available slots in the Tile Molester palette for team selection logos.
You'll want to convert your logo to fewer colors in order to have it match the palette in Tile Molester. Depending on how many colors are in the logo you can reduce it to as few as 1 color (plus B&W). Generally I prefer to use as many colors as I can so that it gives a fade effect. Fewer colors can produce a "too sharp" effect, but it's all just style and preference.
In Indexed Color Conversion, select "Generate optimum palette". You'll already have white permanently available in the palette so you can select up to 10 as the maximum number of colors.
5. After converting your image the colormap will show the colors that were used. (If the colormap is not visible, go to Windows => Dockable Dialogs => Colormap in the GIMP menu bar).
Copy the 6-digit HTML notation to notepad, then scroll to the next color using the arrows in Color index.
6. To save your reduced-color image go to File => Export As. IMPORTANT: while saving, make sure that you have checked the Do not write color space information box.
7. In Tile Molester, navigate to where you want to insert your new logo and load the correct palette:
7. Double click the color that you want to change (don't touch the first 7 colors as they are attached to the team selection banners). Select the RGB tab and copy/paste your color code from notepad and hit OK. Tile Molester will automatically convert to the nearest available RGB color.
Since there are only 256 specific colors available to the game, occasionally 2 colors are so close that Tile Molester will consider them the same and you could have duplicate colors in the palette - it's not a problem.
8. Once all the colors have been changed, go ahead and paste your logo into your ROM. Generally speaking the images come out pretty good but occasionally you'll want to make a tweak or two to fine tune.
9. Here's how it looks in-game:
10. For this example, I probably would have tried to darken some of the detail in the penguin (gloves, scarf) and maybe a little in the text to sharpen it up.