How big of a texture you want to use is really dependent upon your video card and how well it uses large textures. That being said, I measure the size a texture will be displayed and scale it as I load it, so aside from a long load time (unlikely) there's no drawback to using 1080p as a base. PNGs are the preferred image format... 24 bit color, lossless and an alpha channel available so you only have to make them once.
Now as for snaps and stuff, they are loaded on the fly as you scroll through the list, so making them 1080p probably isn't a good idea considering most arcade games are only 240p anyway. Again, how well your video card loads textures will vastly effect the performance on loading. Most modern cards advertise that they can handle 1024x1024 pretty well... in practice 512x512 is a safer bet. That being said, for created artwork, as big as possible is preferred. Afterall we can shrink it, but making it larger would require re-doing it.
Maybe a brief explanation of how the FE works is in order. Again, I've been at this for a while so I've realized that giving a resolution change option for a FE is pointless. It was useful back in the day because emulators were poorly written and didn't always return you to the desktop resolution... but now this isn't a problem. That being said each skin still has resolution entries for setting the resolution of the skin itself. Like the Pac-FE vid I posted... that was captured on my pc with a horizontal monitor, but I set the resolution to 768x1024 so that it wouldn't look distorted.... I just get black bars on either side. Long story short, if you want to do a 4:3 skin or a 16:9 it doesn't matter... it will be displayed the same on any monitor.
Anyway, since I doubt I'll ever fully document this FE, let me just post a skin file and explain it a little:
-----------------------------------------------------
background|0|0|100|100|5|100|100,100,100
logo|3.5|0.3|93.4|9.4|5|100|100,100,100
infoart|0|0|100|100|5|100|100,100,100
list1|-31.75|34.4|28.1|39.4|5|100|100,100,100
list2|2.1|34.4|28.1|39.4|5|100|100,100,100
list4|70.3|34.4|28.1|39.4|5|100|100,100,100
list5|104.15|34.4|28.1|39.4|5|100|100,100,100
list3|35.95|34.4|28.1|39.4|5|100|100,100,100
mlist|0|5|150|150|5|100|100,100,100
cursor|0|0|105|105|5|100|100,100,100
snap|28.8|18.5|42.7|20|5|100|100,100,100
overlay|0|0|100|100|5|100|100,100,100
listeffect|2|30
booteffect|2|2
snappath|\list\
logopath|\logo\
gamelistpath|c:\mame\snap\
animationtime|66
musicvolume|100
loopgamelist|0
streamsnap|0
streambackground|0
streamoverlay|0
streamlogo|0
streamlist|1
streamskip|1
---------------------------------------------------------------------
The format is pretty basic... each element has a few options, x, y, width, height, blend mode (color keyed, solid, alpha channel, ect), alpha value and rgb color tint values. Numbers are in percentage of the screen. In photoshop you can turn on the info window, set it to show percentage and then as you move the cursor around your background image you can get the x/y percent and if you make a box with the selection tool it'll show the width and height of the selection in percent. So yeah, I use photoshop to write the skin files.

The zorder is determined by the order of the skin file. Stuff at the top are in the back of the screen, while stuff at the bottom are in front.
As you can see, each list element has it's own sizing options, so yes, you can size them all differently. You'll notice there are 5 list elements in the skin even though only three are shown. This is so you have a image off-screen on either side to scroll in as the list scroll kicks in. Also note "mlist" and cursor. Mlist replaces the middle list element when you aren't moving. So while scrolling all elements should be uniform size (looks better) but as so as you stop it can zoom in or what have you. Also the cursor (image around the middle list element) disappears while scrolling.... I might change that one.
List and boot effect are just some very basic special effects you can use when moving to another list or up bootup/return from the emulator. I think I've got fades and horizontal/vertical scrolls implemented. Fade looks best for booting while the scroll outs look good when changing lists.
The path stuff is so you can use different elements with any image you choose... traditionally I would put that stuff in the main settings file but I actually find it more flexible this way as different skins can use different image paths. I probably need to add a few more elements btw. For Pac-FE I didn't need a lot, but for this I can see needing at least one more element.
I think music volume and loop game list are pretty self-explanatory.
All the stream stuff just means enabling animation for that element. *EDIT* Oops! it's been a while since I wrote this code. ALL elements have animations turned on all the time, but if you turn on the "stream" setting, the animation is loaded a frame at a time on the fly, instead of all at once. Since a split mng could have thousands of frames, this is a good thing.

*EDIT* Animation time is just a global setting to default all the animations to. Here it's set to one frame every 66 milliseconds, or roughly 30 fps. That can be over-ridden via a "settings.txt" in a animation's folder though.
Streamskip is frame skipping for the animations only. A setting of 1 means render every frame... 2 would mean every second frame, ect... it's similar to mame. So if your vid card can't handle loading the videos at 60fps not to worry, you can easily change it to 30fps or even 15fps and it should still look good. For the record, Pac-FE is on an old P4 in my pacman cab (without a video card) and it can handle 30fps... so as long as you have something decent, you should be ok.
*EDIT2*
I should also mention that each list can have custom images. You'll see that in the PAC-FE video. It's simple stuff... each gamelist is named with a number (gamelist1.txt ect) If you name your image with that number at the end, it'll load for that list. So overlay.png loads for all lists... overlay1.png only loads for list #1, ect... Works for animations as well.
I decided against full-blown custom skins for each list though... it takes a while to load and is visually confusing. Color coding like I did with the my pacman cab totally makes sense though. It lets you know you are on a different list, while at the same time everything is in the same place so you aren't confused while navigating.