Watermarks only on single images, not on thumbnails

Is it possible to have the watermarks only on the single images (when viewed individually) and not on the thumbnails.

The problem is that if the watermark is large enough to be readable on the individual images, it's way too big for the thumbnails (and at least in my instance - running the 3.0 RC1 release).

Also, I tried to upload a watermark image int he PNG format and the upload page just hung htere and no upload happened.

Thanks.