I have several programs written in Delphi XE2 that were converted from Delphi 2005, which under Windows 7 would display horribly scaled icons when shortcuts were made on the
It sounds like you're experiencing Windows caching your icons. All executable files get their icons cached by Windows the first time they're shown, and thus if you change your icon, Windows will still display the old one because it's cached.
You should clear your icon cache. To do this, you need to delete a file which is in a hidden system folder, found at this location:
C:\Users\User-Name\AppData\Local\IconCache.db
Replace "User-Name" with the folder name of your user profile folder. Once you have deleted this, you must log off and back on, or kill / restart the explorer.exe
process. After you do this, everything should show correctly.