I'm interested in creating this, but I'm afraid I'll first have to create a theme plugin that significantly rearranges things (this part is not neccessary) and among other things changes the circular crop to a rectangular one as well as make avatar displays bigger. I believe you'd have to do this step since gifs usually don't have a singular focal point if they're depicting any kind of uncentered movement, otherwise you constrain your users to pretty static gifs. Sadly I have very little time nowadays due to working part-time and having college stuff to do, so it might as well not happen until the start of summer.
In any case, from what I understand about the problem, the first step is to make avatars bigger, since a small gif is no more than a CSS animation. Then you'd probably want to figure out size limitations, as big uncached gifs will likely impact performance and therefore UX severely.
The way things are now with Flarum's design, gifs would just look bad even if they worked. But I believe this kind of feature would be good to have in core, so maybe instead of creating a whole new extension for this we could work together on a core solution? If so, then the first step would be to include a server-wide switch for circular and rectangular avatar frames and an adjustable size.
