This component for Joomla 1.5 and 2.5 allows you to dynamically resize and compress your site images. It includes a plugin framework, with plugins to add a watermark, and to apply dynamic resizing to all your article images.
The component can cache the resized images, and also allows you to encode the image path, which is useful if you want to hide the location of your original image files.
The method of accessing the image resizer is very simple, you just pass the image to the component in an URL. This means that the image generator could potentially be integrated quite easily into any Joomla extension.