Also, after a few WEEKS of looking,

This is the hardest part of Moodle, finding where to change things and make them work. Here, a discussion in General Problems, is a good case in point.
Colin,
I could add a lot of similar examples but mostly they might just show that since first versions of moodle we have seen more and more people asking more and more features but in some cases usability of some actions has not been fully tested.
For example this resizing of editor is easy to solve in moodle 2.0 because in TinyMCE we have a setting "theme_advanced_resizing" - and if it is true in init code of TinyMCE editor gets a tiny button to the right bottom corner that allows you to resize editor both horizontally and vertically - in addition to full screen editor button. And TinyMCE has also a core plugin called autoresize which automatically resizes the editor to the content inside it. This is just not (yet) in init code of moodle 2.0...it is a little buggy and manual resizing works better. A bigger question is what user preferences will be added to moodle 2 later - or are all users forced to use similar editor everywhere...and how init code can be modified.
We have also discussed about theme settings (settings.php) in theme forum and in moodle 2.0 it will be in a way "easier" to implement all kinds of changes - but in some cases you will always need either php, javascript or css to make modifications that do not have preset settings in administration menu - or user-selectable options to modify their tools.
Talking about Labels and editor (HTMLArea) height there see
http://moodle.org/mod/forum/discuss.php?d=129773
Popup sizes for HTMLArea are defined in file lib/editor/htmlarea/dialog.js and for emoticons
case "dlg_ins_smile": x = 330; y = 320; break;
(x and y in pixels)
It might have been reasonable to add these settings to Administration > Appearance > HTML editor where you can add emoticons to this popup (and corresponding images to pix/s/ ) ... but remember - it's the OLD HTMLArea
In my HTMLArea it is there - line 34 of lib/editor/htmlarea/dialog.js...or are you talking about moodle 2.0 and tinymce?
Try to change that line for example to
case "dlg_ins_smile": x = 530; y = 520; break;
When you make changes to those javascripts remember to refresh your browser - in Firefox you may need to use mouse right click - Refresh over toolbar or clear cache / temporary internet files to see the result.
When you add smileys from administration panel you actually add only "tag smileys" - if you want to add also image smileys you might want to edit lib/editor/htmlarea/popups/dlg_ins_smile.php and add the new images to actual popup window (plugin) - the smiley arrays...
$emoticons = array... (line 20)
$list = array('smiley', 'biggrin', 'wink', 'mixed', 'thoughtful', 'tongueout', 'cool', 'approve', 'wideeyes', 'surprise'); (line 87)
and a little later
$list = array('sad', 'shy', 'blush', 'kiss', 'clown', 'blackeye', 'angry', 'dead', 'sleepy', 'evil'); (line 106)