I see— thanks noah. Its starting to seem like truly responsive thumbnails are not possible with WP, just the ability to control what fixed size that thumbnails are displayed at and then readjusting the size of the thumbs to fit the width of the page (for example here: http://themes.mdnw.net/?theme=SuperSkeleton).
What I am after would function more like this: (http://danielvane.com/). Is this possible using the the thumbnail functionality in WP? All apologizes for the total noob questions! Thanks for the feedback.