Tinycon allows the addition of alert bubbles and changing the favicon image. Tinycon gracefully falls back to a number in title approach for browsers that don't support canvas or dynamic favicons.
Alerts in the favicon allow users to pin a tab and easily see if their attention is needed.

I have made a new Favicon generator, Faviconist. Since most favicons are just a letter with some colour theme, I found it crazy to have to open up a photo editor every time I wanted a new favicon. Or alternatively, it’s easy enough to convert an image with ImageMagick, but most images don’t scale down nicely to a tiny icon! So the aim here is not an editor as such, but a true “favicon generator”.