Isn't Windows 98 already capable of displaying high-color icons out of the box?
Just for the sake of expanding upon the topic, Windows 9
5 can display high-color icons by adding the string value "Shell Icon BPP"/"16" to HKEY_CURRENT_USER\Control Panel\desktop\WindowMetrics from the Registry Editor, or by going through the Display Properties dialogue from the Plus! pack (which appears when you install the
font smoother, among other things) and checking the option. Technically that involves 16-bit color instead of 32, but there's hardly a practical difference in the context of pixelated desktop icons.