Toby Badges serve as a quick visual marker of various aspects of a discussion's state, so it's important that all badges are visible without requiring any user interaction. On the other hand, I don't think visibility of the whole avatar is that essential on the discussion list – as long as the majority of it is visible.
Late to the discussion, but I agree with all of that. For us it will be important to easily see what groups members belong to, and a lot less important to see the full avatar, which, let's agree, nobody but the vane and brand-conscious cares about. ?
One idea about positioning that would be cool, actually, is to wrap badges clockwise around the circle of the avatar instead of just across the top. So if we think of it like a clock, the admin badge is at 1:00, mod badge at 2:00, third is 3:00, etc. Scout badges of status and achievement!
We already have 4 groups, and could easily have six or more later due to our collaborative initiatives, but we're probably an edge situation. It's doubtful that most boards would ever get to 6:00, certainly not 12:00. But a circular scheme like this would easily allow up to 12 badges.
I don't know how hard that would be but I think you can do circular stuff in JavaScript, yeah?