- All thumbs would have to be available on the server before the sprite can be encoded, which defeats progressive rendering. (Progressively encoding JPEG might be a possibility, but this isn't something we explored.)
- The additional cost of encoding/decoding a large image on the server/client.
-- Ziga (author)
Also to combine JPEGs into a sprite, you can avoid all DCT/iDCT/color operations and use only the Huffman portion of the codec (decode, concat, encode). Since Huffman throughput is a considerable multiple of gzip (~10x?), I think you'd be quite a ways ahead, for memory and time.
2) How is it any more work to encode? It's the same total number of pixels and the memory footprint isn't that large for server or client.
I don't mean to dis your efforts, looks like you've done some nice work that performs well.
I just think cloud/media management is an interesting problem with a lot of different ways to look at it.