It is very nifty for any game creators who are going to make a 1-bit game, since it can convert any number of icons at a time, and even gfx's.
Also for anyone who wants to cheat for a pixel contest can slip a few good icons into there and let it do the work(Shh, we wont tell maggeh, or monkeydidit, it'll be our secret).
I was inspired to start working on this when someone posted a 1-bit image(137456's ti-83 topic), and people started talking about a 1-bit challenge&Collaboration.
Here is a sample i've got from it so far.

Here is what dan has gotten(It is a png that is converted).

The demo is located at:
http://developer.byond.com/hub/Bakasensei/1BitConverter
Hope you guys like it, and this helps you out! Give me some C&C on the game, and if you find any bugs please tell me at [email protected] or my byond key: Bakasensei.
{EDIT}
Fixed some stuff and made this post on my members account, so I thought id add it here too.
Here is an example of an icon I put through the program, then through ms paint, pixia, and gale(All same results), hand drew it best as possible, and shows the real icon.

The first icon face is the one I put through my 1-Bit image converter
Second is the regular icon(That I drew for the pixel art challenges and collabriation).
Third is my best possible hand drawn 1-bit version of the icon
Fourth is the same result from 3 different graphics programs(MS paint, Gale, and Pixia).
That has to be proof, that this program works. And if you think those were editted, run the icon in the program yourself. I used the default shade level for it(You can pick the shade level at start). default is perfectly balanced, so black is 1/3, dithering is 1/3, and white is 1/3.
So I really hope this game helps you guys out, if not its fun just to screw around with it, or plug in your best of best pixel art, and see what they would look like in a 1-bit format.
Though, I do have one question. If Dithering is implemented, do you allow users to toggle dithering on or off?