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This is pretty cool. Are there any practical applications? It seems the CSS images are orders magnitudes larger.

Embedding images in emails that disallow images but allow css?

The majority of common email clients do not support css box shadows (as of 2014):

I question the value of adding MBs to your email to forcibly embed an image.

Actually this could become a liability if spammers catch on.

Could just as easily use a table to create an image in an email

These guys already did something like that - https://www.emailonacid.com/mozify