...in reality there are 3rd party smiley add-ons that work with IM software. You can recognize them by the "Your buddy sent you a smiley, to see it you need to install X software" type of IMs.
That software is not exactly good for your computer either.
For example: http://emoticons.smileycentral.com/yahoo-smileys.jsp
Choice quotes from EULA
UNIFIED REGISTRATION: As a service to our users, we may consolidate registration data for Webfetti, My Fun Cards, Kazulah, Smiley Central and certain other specified websites, services or applications accessible via the Toolbar, so that users are only required to provide registration information once, and would then be able to use the same unique ID and password to access all such websites, services or applications.
Passwords. In order to access certain services, you may be required to accept additional terms and conditions and/or establish an account including an unique ID and password
After reading that EULA, which references a bunch of other EULAs... that's enough to send my head spinning.