Hot spot is just what it's called. Lets say you wanted a new cursor icon, you make a sword, set an hotspot on the tip so when you point over a mob, it diplays their name if the tip touches them. If you don't have a hotspot, then it wont show their name until the middle of the 32x32 icon touches. As for the color thing, I was trying to figure out that same formula. If WizDragon would be kind enough to share details/snippet on it, that would be very helpful to some. You can try contacting him.

Well, I do know that he used something like:

//SwapColor Test Proc
mob
proc
CustomizeIcon()
..()
switch(input("What will you change on your icon?","Customizing Icon") in list("Clothes","Accessories","Done"))
if("Clothes")
var/icon/I = new(usr.icon)
if(prob(30))
I.SwapColor(rgb(255,255,255),rgb(255,000,000))
usr.icon = I
else
..()
if(prob(30))
I.SwapColor(rgb(255,000,000),rgb(000,255,000))
usr.icon = I
else
..()
if(prob(30))
I.SwapColor(rgb(000,255,000),rgb(000,000,255))
usr.icon = I
else
..()
if("Accessories")
src.loc=locate(9,11,1)
return
if("Done")
src.loc=locate(9,11,1)
return


This is the code I wrote, what WizDragon did is, he first got all the colors of the original DW icons, used the SwapColor() proc, then switched them using either pick,rand, or goto. Thats basically all I know so far. I tried asking him on the pager, but he says "It's too difficult for you." I guess he's not willing to share.