Header images can be pretty much any size. I have my site width set to the maximum of 1000px since the majority of internet users have a screen with a resolution of 1024px. This allows for the addition of a scroll bar without having to side scroll. The image that I am currently using on my main blogger site is 80px tall by 1000px wide. That was just a size that worked for me but I would suggest that whatever image size that you choose, you should install it or one of equal size to see what it does to the rest of the page elements. I like to use my own background images to control the design of the site so it is important to see where on the page that elements such as navigation, sidebar, and page content are located. After that I use a screenshot and Photoshop to create the rest of the imaging.
I prefer to use the option of using a full image in place of the website title. This allows for two added benefits. First off, from a design aspect It allows better control over image placement, text styling and browser rendering. Second and probably most importantly, it allows you to extend your website title. This will now be the title tag attached to each page of your site with the extension of the individual page title. I'm not sure if it will act the same as a standard title tag yet, but it can't hurt.
Another option is to place the header image inside the background image. If the header is removed, then the navigation (pages) will be moved to the top of the browser window. If this is not the preferred setup, you can use a completely transparent image as the header which will push the rest of the page elements lower on the page depending on the size of the transparent image. In order to assure that your visitors are seeing the same thing that you are, you should always view your blog in as many browsers and on as many systems as possible.
