The preview works fine cause you need to click save after uploading anyway.
For my theme I went with a more conservative border-radius of 3px.
I agree with @mcwumbly this does strongly highlight the need for a cleaner way of sharing customizations and shipping with multiple themes.
Unlike the category badge I agree there is no reason to add a site setting here, it all fits in a single CSS rule.
Adding an image editor / cropper feels like tons of work to me, not against it, just not something I see core team working on in the next 12 months.