How to increase icon size of xfce4-panel window buttons (panel-tasklist-menu) [closed]
If you mean the Window Buttons panel plugin, then what you describe seems to be the behaviour when you have Show button labels enabled in the plugin Properties. This certainly sounds like a bug and you can report it on Xfce's Bugzilla.
You can improve the icon display if you uncheck that option, which will result in a Windows 7-like look of the tasklist (which I find more useful and easy to use). In this config, the icons are scaled appropriately.