make the header image height smaller. is this possible at all with the CSS upgrade, and if yes, how?
First, you should create a header image with the dimensions you'd like to use on your blog, upload it to your media library, and copy the image URL.
Here is one example showing how to replace the built in header image in the Twenty Eleven theme with a smaller size that you set:
#branding a img {
display:none;
}
#branding > a {
display: block;
background: url(YOUR_IMAGE_URL) repeat-x;
width: YOUR_IMAGE_WIDTH;
height: YOUR_IMAGE_HEIGHT;
}
Replace YOUR_IMAGE_URL with the image URL from the image you uploaded to your media library. Replace YOUR_IMAGE_WIDTH and YOUR_IMAGE_HEIGHT with your image width and height.
For reference, using > in a selector is called a descendant selector and here it's supported in a wide range of browser versions:
http://caniuse.com/#search=2.1%20selectors