I left post count out of my suggestion for a reason. It could possibly lead to people spamming to get higher post count. (Awww, hell. Who am I kidding?)
Anyway, it being based on time is the easiest way for this system to work. See it as a reward for the time you've spent on the forum. Like Noxid said it doesn't mean one user is better than the other, just the user has spent more time on the forum than the other.
If you spend more time on the forum you should get better rewards. It works like it does in real life. You don't go to a place as a completely new face and expect everything that people who have been there for 10 years before you get. It may seem as unfair, but in fact it is the fairest way to reward someone.
I was basing my statenent off of MS's example. I didn't know if the forum would change the quality of the image like it did in her example. If it doesn't, then I have no problem with it.
I just took a 90x90 image and made it 100x100, 150x150 and 200x200 which is why it looks like that. Images that are naturally bigger size won't look like that.