i use.....paint! jk jk jk I use/have adobe photoshop 6.0, adobe photoshop 7.0, imageready 3.0, and imageready 7.0 lol
Wanna see a site made my paint? My bro took a aprt of the site and modified it completely and went from about a 150x150 part to a full site. He did not made the banner :\ http://theice.clan.st (its french the whole way since its a french clan) reallyyy funny but its very very very very good since its has been made from paint
PhotoShop 7.0 mainly. I also have ImageReady, Paint Shop Pro 9, and Animation Shop. And you said doing it dot by dot in paint. I have seen people that have done that. They are amazing outcomes.