You're absolutely right, support for larger icons would be better. So I've been working on that: here is Iconverter version 0.9.
The reason the old version wouldn't support icons larger than 93 pixels wide or 93 pixels high is because this is a limitation of the NewIcons extension.
ColorIcons, on the other hand, support a maximum of 256 pixels wide and/or high. (Still not enough to convert the ginormous IconMaster icon, though.) The new version of Iconverter now supports ColorIcons, and creates those by default. (You can still create NewIcons with the -newicon option.)
I initially thought NewIcons would be more compatible, as the NewIcons package has been around for a long time and can even work under AmigaOS 2.x. ColorIcons, on the other hand, were introduced with AmigaOS 3.5. However, it turns out that AmigaOS 3.1.4 also supports ColorIcons and with IconLib_46.4 you can have ColorIcons under AmigaOS 3.0. (And even PNG icons!)
Aside from the larger maximum size, ColorIcons use less disk space than NewIcons and there's an extra option to handle borders. So for these reasons I decided to make ColorIcons the default for Iconverter.
About the borders: as of WB 2.0, the Workbench draws a 3D border around all icons. I never liked that, so I always used a tool to turn this off. However, with NewIcons the icon can ask the Workbench to not draw a border around it. So that's perfect for WB 1.x icons converted by Iconverter for those of us who want to see WB 2.0+ icons with borders as intended, but WB 1.x icons without borders, also as intended.
Unfortunately, IconLib46 doesn't honor this request and it always draws a border, unless you use a tool like Birdie to turn off those borders. In that case, if you still want a border for certain icons, you'll have to use Iconverter's -border hard option. (You can even do -border both and get two borders if borders aren't turned off...)
Another improvement in version 0.9 is that it can read the palette to use to convert icons from the palette in an IFF file or from a the settings on a WB 1.x disk. So if you have a Workbench 1.x disk with a customized palette, the converted icons will then also have that palette. Looking around in my ADF and DMS files, I found a few demos that have a custom palette, but none of them load the Workbench so so far I haven't been able to try this for real.