Thanks to all contributors, we should have solved our problem, but haven't.
We use D2007 on W7 64-bit. We grabbed a working, resizable icon from the desktop using IcoFx, switch off PNG compression and saved it. Added it as the only icon to a simple Delphi app using Project\Options\Application\Icon, then ran ReplaceVistaIcon ourapp.exe savedicon.ico, and could see the resultant increase in size. Noting comments about replacing versus adding, we also tried adding 0 and 1 as a third parameter.
No dice, any ideas?