The solution you propose should work but there seems to be a problem, at least when I try to do it. This is the message I get:
"Sorry, an error occurred. If you are unsure on how to use a feature, or don't know why you got this error message, try looking through the help files for more information. The error returned was: You are not allowed to upload that type of file as an avatar or personal photo."
The picture I used was a simple jpg-file of the demanded size.
I found a work-around: I put the avatar on my personal website and made a link ("Enter a URL to an online avatar image", on the same page) to that picture.