Yep, that's true... While all sprites are originally 64x64 pixels. You can really make them any size you want.
The sprite is always positioned against the bottom and left edges of a square. So while you could, in principle, make a giant 256x256 "monster" unit, only the lower-left 64x64 would look right and the rest of it will be screwed by the surrounding graphics.
You could make, say, a 64x32 unit. Which would then be half as high, and accordingly, the health bar would appear half as high as well... But that will only be the case for that one particular changed sprite graphic.
Now I think of it... About the extra-large graphics looking screwed-up... Maybe that can be used to hide the health bar.
That is, if you would change a unit sprite to 128 pixels high, the health bar should appear one square too high. But then it might actually be obscured by the other unit/terrain graphics, essentially hiding it from view.
I'll have to test that... I have a funny feeling it won't work and will just look ugly.
