One other thing I guess - the less transparency above and below the actual image, the larger it will display.
I don't think you can get the button to occupy the entire height of the taskbar though. If you make a solid rectangular image for it in the correct size, you can see the area the button occupies.
(And now that I think about it, I'm not sure if having the ratios wrong makes it smaller or if it stretches/distorts it. Sorry, it's been a while.)