Here is the solution for those that want it....
This will watermark LARGE and THUMB images
It SHOULD work with database and filesystem images
I AM NOT OFFERING ANY SUPPORT I am just sharing what I personally did
So please don't ask questions and expect an answer

First grab yourself a copy of this
http://phpthumb.sourceforge.netInstall it to your server and test that it is working. You should construct your url in a similar way to this:
http://www.
domain.com/phpthumb/phpThumb.php?src=/images/detailed_images/
filename.jpg&w=
298&q=100&fltr[]=wmi|/images/watermark.png|BL
Read the instructions of the program and check out the demos at the above site to see how to customise that url.
One you know it is working and can see it is applying your watermark image you need to insert the url to image.tpl in the common templates folder. Look for the line
<img {if $obj_id && !$no_ids}id="det_img_{$obj_id}"{/if} src="
and after the src=" put something like the following
/phpthumb/phpThumb.php?w=298&q=100&fltr[]=wmi|/images/watermark.png|TL&src=
After the src= at the end you should have what was originally there... something like {$image_src}" {if $image_width}width="{$image_width}"{/if} {if $image_height}height="{$image_height}"{/if} alt="{$images.$checktype.alt}" border="0" {if $close_on_click == true}onclick="window.close();"{/if} />
Upload the image.tpl file and that should be it, save for a little tweaking.
If you set the width "W" to be that of your detailed size images, it should apply the watermark to the thumbs at the same size. So if you put BL or TL you may find the watermark does or doesnt show on the thumbs. Read the instructions and have a play... but this should be the basics for most people.
Again, I am not here to answer support questions as I don't know the answers, I just worked this out and wanted to share in the hope that it helps others on the way.

The key is the src= part of the image.tpl file... you should be able to use most image resize php scripts via that src call.

Have a good day!
David