It sounds like you really have four configurations you want to support, but it just so happens that only two are available on actual devices right now:
SDK < v5, normal DPI; SDK v5, normal DPI; SDK < v5, high DPI; SDK v5, high DPI
The last is the Droid, the first is nearly every other Android phone currently in existence (except the Tattoo), and the middle two don't exist yet.
You can create alternate resource icons for as many of these cases as you want and make each one the correct size and style.
res/drawable-mdpi-v5/icon.png (For non-Droid phones as they are upgraded to Android 2.0; a 32x32 icon in 2.0 theme)
res/drawable-hdpi-v5/icon.png (For the Droid; a 42x42 (?) icon in 2.0 theme)
res/drawable/icon.png (For everyone else; a 32x32 icon in 1.x theme)
As for how I'm handling all this... I'm not.
I don't think this works if you're trying to maintain Android 1.5 compatibility. I have not migrated my apps past Android 1.5 because there are a lot of HTC Hero's out there still stuck on it (especially outside the US). My layouts scale up just fine, but I looked into it and couldn't find an elegant way to add extensive support for multiple screen sizes/densities and also keep 1.5 compatibility at the same time, so I'm just waiting for everyone to be at 1.6 or higher. Android 2.0 users can get by with scaled up icons and layouts in the meantime.