For those who are saying "Mavericks fixed this", could you please clarify as to whether the problem is "fixed" in the sense that the icon thumbnail cache no longer needs to be cleared periodically by people who customarily create and attach hundreds of custom icons to files? I have read this entire thread, and so many older posts have announced "fixes" that were really only temporary. Like the difference between mopping a floor vs fixing a leak in the roof.
A good test is to create a folder containing 200 or more image files, each of which has a custom icon created by opening the image and copying some piece of the image (more than 300 pixels in at least one dimension, but NOT nicely 512x512), and pasting it over the default icon image in Get Info. (In my case, I make scans of vintage greeting cards, and since the full scan is typically unfolded to show all four panels of the card, but the files are hard to recognize in the Finder when the full image is scaled to icon size, what I do is create a custom icon for each card by scaling the front section only down to about 360 px to 400 px in the long dimension. Most cards are not square.)
If the problem is fixed, you will be able to open and scroll through such folders in icon view at a variety of large icon sizes (higher than 200 px) without any periodic rebooting or cache cleaning, and the custom icons will stay sharp all the way up to the size that you saved them at.
Eric Westley's suggestion of never creating such folders in the first place (instead subdividing the folders so that each contains only a modest number of files) works, but is very annoying, since the whole purpose of using custom icons is to allow visually scanning a folder to look for a given card. Having a lot of folders with fewer cards requires opening each of those folders. Furthermore, it often forces an unnaturally fine categorization, making it ambiguous as to what folder a given image file should be placed in. I'd rather live with blurry icons than have to use an unintuitive categorization.
I would like to know if upgrading to Maverick, which I have not done, will relieve me of this headache. The announcement that "Mavericks fixed this" is so terse that it is unclear what form the fix took.