Icons for applications must be provided as bitmaps in the .mbm file format. You create an .mbm file by launching the AIF Icon Designer through the commands on the Action menu:
use Create MBM to create a new .mbm file
use Edit MBM to edit the .mbm file currently specified on the How to use the UI Variants tab
You can also create .mbm files with the command-line tool The Bitmap Converter.