I've had this done for quite some time, but what i'd like to see is a full interface, to scale, crop, resize and rotate. Along with watermark abilities in X-Cart.
The current code I have makes mini-thumbs just the same, but not on the fly, and the data saved to the file system along with an new entry in xcart_images table so you don't get HTML resized images.
Its quite lenghty code, I suppose I could post it if anyones interested, I doubt I'll get around to making a fully featured GD extension like I mentioned above anytime soon. Perhaps someone can integrate the two GD mods?