I'm trying to make the bounds rectangle of my sprite smaller than the sprite itself in an attempt to make a customized "hit-box" for it. But everytime I shrink the bounds rectangle, and export my sprite, the changes I made to the bounds rectangle don't register. The only use for being able to resize the bounds rectangle seems to be to crop your image. Am I missing something here?

I think you're misunderstanding what that bounds rectangle does. It specifies a capture box to determine what bitmap data will be displayed for the sprite. If you've ever used SWFSheet you'll notice that you'll have to manually specify the bounds rectangle. With Spriteloq that's automatic and what we call automatic bounding.

If you need a customized hit box you need to use the shape box tool to draw a rectangle. Then you can use the API to get the shape to do collision detection: http://www.loqheart.com/spriteloq/apidocs/files/loq_sprite-lua.html#SpriteGroup.getShape

Thanks for clearing that up, Don. Yes, I was hoping for the bounds rectangle to be a separate tool (independent of it's cropping functionality) with the express purpose of creating customized "hit-boxes" for non-physics based collision detection (a la Street Fighter), but the shape box tool will have to serve this purpose. Now if I can just find a way to get rid of the physics effects that accompany the use of this tool! (I explain more in my other thread dealing with "hit-boxes" https://developer.anscamobile.com/forum/2011/08/27/how-do-you-make-sprites-hitbox-smaller-its-bounds-rectangle)

Much thanks,
Steven