Its both... You make different rank groups "Rebellion, Imperial, Hutt, Jedi" lets say, and the user selects in their profile which set of user titles they want. And I *think* you can use HTML in user titles to add images next to it (For instance, lets say they have 2000 posts and that makes them a 'Jedi Master' a lightsaber could appear under the title or something).
Have a look at these;
http://www.draxdesigns.com/images/vB...ass/shot01.gif
http://www.draxdesigns.com/images/vB...ass/shot02.gif
Also keep in mind vB support told you that vB does not support it because the most current release doesn't. vB3 might have something like it though (I personally dislike vB3 though, so if I need a vB3 feature I will just hack it).