I've been looking for something like this that actually works for around 4 years now. We have a rule for the maximum area that a sig can take up, and it's the biggest pain to enforce.
As my forum is a fixed with, I have already used a div with CSS overflow to restrict the width myself, but height was always an issue. I've found so many hacks in the past which claimed to do as yours does, but the problem was that they either didn't work, or they forced a specified height to be displayed, even if the user only had a small one line sig, leaving a gap below smaller sigs. Yours is the first one I've found which actually doesn't do that.
So I thank you so much for this hack ... this will save a lot of headaches.
Abe Babe...