Is a Circle effect possible?

This is probably the mask effect. Find a grayscale mask (in your case a white circle with black edges) and use that for the mask effect. The grayscale determines how transparent a pixel becomes: white = fully opaque, black = fully transparent (thus invisible). You will probably have to add a change format effect (to png) as well, or you will get white edges in your result.

The mask you will indeed have to create yourself or find on the internet, e.g. http://css-tricks.com/webkit-image-wipes/. Note: I guess you meant the effect as described in this article. Our mask effect is the same as the -webkit-mask-box-image effect from the webkit browser.

If you know the size of your final image, you can just create an image style which uses the rounded corner effect from image cache canvas actions, probably combined with a scale and crop. Just set the corner radius to half the width of your image, so for an image 100 x 100px image, set the radius to 50 an you'll end up with a circular image.

Good idea, I tested it and it works, see attached image. This closes this issue I think.

Or using the export option (as of 7.x-1.x-dev version) of the Image styles admin sub module:
a:5:{s:4:"isid";s:2:"19";s:4:"name";s:12:"test-1740120";s:6:"module";N;s:7:"storage";i:1;s:7:"effects";a:3:{i:26;a:12:{s:5:"label";s:21:"Schalen en bijsnijden";s:4:"help";s:203:"Bij het schalen blijft de breedte-hoogte verhouding van de oorspronkelijke afbeelding behouden. Bij het bijsnijden wordt de langste zijde ingekort. Hiermee kunt u bijvoorbeeld vierkante miniaturen maken.";s:15:"effect callback";s:27:"image_scale_and_crop_effect";s:19:"dimensions callback";s:23:"image_resize_dimensions";s:13:"form callback";s:17:"image_resize_form";s:13:"summary theme";s:20:"image_resize_summary";s:6:"module";s:5:"image";s:4:"name";s:20:"image_scale_and_crop";s:4:"data";a:2:{s:5:"width";s:3:"200";s:6:"height";s:3:"200";}s:4:"ieid";s:2:"26";s:4:"isid";s:2:"19";s:6:"weight";s:1:"1";}i:27;a:12:{s:5:"label";s:15:"Rounded Corners";s:4:"help";s:79:"This is true cropping, not overlays, so the result <em>can</em> be transparent.";s:15:"effect callback";s:34:"canvasactions_roundedcorners_image";s:22:"dimensions passthrough";b:1;s:13:"form callback";s:33:"canvasactions_roundedcorners_form";s:13:"summary theme";s:36:"canvasactions_roundedcorners_summary";s:6:"module";s:24:"imagecache_canvasactions";s:4:"name";s:28:"canvasactions_roundedcorners";s:4:"data";a:2:{s:6:"radius";s:3:"100";s:23:"independent_corners_set";a:2:{s:19:"independent_corners";i:0;s:5:"radii";a:4:{s:2:"tl";i:0;s:2:"tr";i:0;s:2:"bl";i:0;s:2:"br";i:0;}}}s:4:"ieid";s:2:"27";s:4:"isid";s:2:"19";s:6:"weight";s:1:"2";}i:28;a:12:{s:5:"label";s:18:"Change file format";s:4:"help";s:49:"Choose to save the image as a different filetype.";s:15:"effect callback";s:26:"coloractions_convert_image";s:22:"dimensions passthrough";b:1;s:13:"form callback";s:25:"coloractions_convert_form";s:13:"summary theme";s:28:"coloractions_convert_summary";s:6:"module";s:23:"imagecache_coloractions";s:4:"name";s:20:"coloractions_convert";s:4:"data";a:2:{s:6:"format";s:9:"image/png";s:7:"quality";s:2:"75";}s:4:"ieid";s:2:"28";s:4:"isid";s:2:"19";s:6:"weight";s:1:"3";}}}
You can import it when you have the Image styles admin sub module enabled.

Great post. I followed the screengrab & generated my circular image presets.. Thank You!

i did the circular presets, though i'd love to be able to drop shadow or draw a border to the circle, but this would appear to not be possible with presets because we're still dealing with a rectangle, albeit with transparencies in a png presenting a circle through css

anybody every generate a true modification for a circular image to which effects may be applied?

A border is easy. Extend the image style from #5 with a define canvas (in the vorder color) and do again a rounded corners, now with the border radius added:
a:3:{s:4:"name";s:15:"example-1740120";s:5:"label";s:15:"example-1740120";s:7:"effects";a:4:{i:229;a:3:{s:4:"name";s:20:"image_scale_and_crop";s:4:"data";a:2:{s:5:"width";s:3:"300";s:6:"height";s:3:"300";}s:6:"weight";s:1:"1";}i:230;a:3:{s:4:"name";s:28:"canvasactions_roundedcorners";s:4:"data";a:2:{s:6:"radius";s:3:"150";s:23:"independent_corners_set";a:2:{s:19:"independent_corners";i:0;s:5:"radii";a:4:{s:2:"tl";i:0;s:2:"tr";i:0;s:2:"bl";i:0;s:2:"br";i:0;}}}s:6:"weight";s:1:"2";}i:231;a:3:{s:4:"name";s:26:"canvasactions_definecanvas";s:4:"data";a:4:{s:3:"RGB";a:1:{s:3:"HEX";s:7:"#ff0000";}s:5:"under";i:1;s:5:"exact";a:4:{s:5:"width";s:0:"";s:6:"height";s:0:"";s:4:"xpos";s:6:"center";s:4:"ypos";s:6:"center";}s:8:"relative";a:4:{s:8:"leftdiff";s:2:"10";s:9:"rightdiff";s:2:"10";s:7:"topdiff";s:2:"10";s:10:"bottomdiff";s:2:"10";}}s:6:"weight";s:1:"3";}i:232;a:3:{s:4:"name";s:28:"canvasactions_roundedcorners";s:4:"data";a:2:{s:6:"radius";s:3:"160";s:23:"independent_corners_set";a:2:{s:19:"independent_corners";i:0;s:5:"radii";a:4:{s:2:"tl";i:0;s:2:"tr";i:0;s:2:"bl";i:0;s:2:"br";i:0;}}}s:6:"weight";s:1:"4";}}}

A drop shadow is trickier. I guess you have to revert to css-3 for that, unless someone else is more creative than I am here.

Examples

for those interested, here's a couple of screenshots of the filters i applied and the order in which they're applied to create (in my use case) a:

rounded profile picture with thin 5px border around it...images attached (not sure how they'll present in the NEW drupal.org issue queue format ;)

Nice, I have transparent PNGs too and I had to add a second canvas (relative size setting all to 0) before the first rounded corners.

Manual Crop: Crop and scale 120x120
Change file format Convert to: png
Define canvas left:0 right:0 top:0 bottom:0 #ffffff under image
Rounded Corners 60px
Define canvas left:5 right:5 top:5 bottom:5 #cccccc under image
Rounded Corners 65px

#Alan D

Perfect!
Another example:

Scala e ritaglia 200x200
Change file format Convert to: png
Define canvas left:0 right:0 top:0 bottom:0 ##ffffff under image
Rounded Corners 100px (50% of dimension)
Define canvas left:5 right:5 top:5 bottom:5 ##6dc173 under image
Rounded Corners 105px (50%+5px of dimension)

Conversione PNG
Scala e ritaglia 300×300
Imposta tela - Dimensione esatta: 100%x100% Posizionamento: center-center - Colore: Trasparente
IEK - Corner ( radius: 150px )
IEK - Border ( border color: #FFFFFF, border top: 30px, border right: 30px, border bottom: 30px, border left: 30px )