Nice! Good idea.
The site for base64encoder doesn't work for me.
This works:
http://www.motobit.com/util/base64-decoder-encoder.asp
It is NOT necessary include encoded image into the xml, remote URI can be used instead. However I was not able make IE7/8 show icon unless I used .ico. Maybe because I didn't have the right image:
When possible, search engines should offer a 16x16 image of type "image/x-icon" and a 64x64 image of type "image/jpeg" or "image/png"
Also, your JS function doesn't work on other then FF1.5
I've attached one php file that generate .xml and JS code that works in IE7 and FF1.5+ (tested on IE8 and FF3)
Also, this file includes search suggestions
There are a few settings can be tweaked.
The file needs to be saved in 4images root folder
In header.html template need add this:
<link rel="search" type="application/opensearchdescription+xml" title="{lang_search}: {site_name}" href="sp-opensearch.php?xml" />
<script src="sp-opensearch.php?js"></script>
P.S.
Please use zip archives instead of rar because zip is more common used then rar and not everyone has tools to extract from rar.