Is there not a way OpenID providers can provide avatars directly?

well Gravatar is a fairly established service, it makes some sense to make use of it (because a lot of people could well have a gravatar anyway :))

On the other hand, it strikes me as odd, when using a decentralised method of identifying myself, to use a centralised means of providing my avatar. Particularly when that centralised means depends on 2 third-party sites (Gravatar and OpenIDAvatar) being up.

true. I know there was a proposal at one point to set an avatar standard within the OpenID protocol. But I think it fizzled out.