Imho, that should be an extension specific setting and not a global one.

If considered, please alpha order new string
+COM_CONFIG_THUMBNAIL_SETTINGS="Image Thumbnail Settings"

I agree with @Bakual at best this should be a constructor parameter (add a $options array which makes this easier). Then it's down to the extension to initialise as appropriate. It's definitely NOT something to be set in the application

To be honest I'm not even sure if it should be a function specific parameter (you might want to resize an image in good quality at large resolutions and low quality at smaller, for example)

Closing this PR as it will not be merged in this form.
Feel free to propose something in the class itself which can be used by the extensions.

I'm not sure witch is the right solution but I have tested this and there is an error in the way JImage generates png thumbnails, ending in pixelated results. And with Thong's way the thumb looks good.

Linking here Roberto's comment redCOMPONENT-COM/redCORE#548 (comment)

I agree that this needs fixing. But setting it at the JFactory level is 100% wrong. As I said I think it should be at the function level - but if people want it at the class level like i said I could understand it.