I don’t think that it works offline, and just like a regular skin it doesn’t react to forms.
The main limit to the skin size the set file size limit.
And what I did to get a precise image resolution was to look at the base minecraft image, and just multiply it’s scale by as much as possible as long as the result is within the file size limit.
This was my quick test skin: http://www.mediafire.com/view/mngkrbs3bhi02yc/hd_skin_example_1.png/file
The size for it is: 2048 x 1024