I can look into removing bookmarked sites, but this will require an extra permission to read your bookmarks, so I would make it optional (similar to how switch-to-tab is optional). Perhaps a more general feature to hide sites from the drop-down could be implemented faster (and if you have a lot of bookmarks, would perform better).
Regarding the size of the drop-down panel, there's nothing an extension author can do to increase beyond 800x600. One alternative would be to add an option to open the list a separate popup window. I'll have to look into whether that would perform well.
