in 1.65 you pick something like "make the name of the item the active applications name" or something like that, and the icon setting got something similar, I don't have 1.65 installed anymore so I can't check to know exactly what it says.
I used it for the taskbar popup menu I used, it had the same name and icon as the active window/application, so in this case it would be named "Making an item have the same..." with a firefox icon, pressing it would ofc bring up a dropdown of all active tasks, allowing me to switch to another application. (I know how to do that part in 2.0)
Here is a pic of it in action: http://img131.imageshack.us/my.php?image=clipboard04oy3.jpg
The bar item that is the taskbar dropdown has the same name and icon as the folder with focus.
It was a sad smiley, ": (" but the forums makes that into an angry smiley...