I made a quick cheat engine script to get "clean" screenshots of the watermarks. It clears the framebuffer just before the watermark is added so only the watermark itself is saved. It also forces watermarks to be added to lossless tga images. I didn't bother checking if the addresses are watched by warden (unlikely, but not impossible) so use at your own risk or use a trial account.
How to use:
In cheat engine click "Memory View"
From the Tools menu select Auto Assemble
Paste the script
take a screenshot in wow
Remember to set the screenshot format to TGA. Paste
/console screenshotFormat tga
in the chat.
Example image https://dl.dropbox.com/u/12654979/Wo...012_114416.tga
mov edi, eax // pixel buffer
imul ecx, edx // ecx = height, edx = width
mov eax, FF0000FF // light blue color, full alpha
wow.exe+18DCAC: // TGA patch
wow.exe+18DCB5: // jpeg quality patch
The fact that all 11 rectangles are pixel-perfect identical, and the tga format itself, should prove that it's not compression artifacts.
The data encoding seems to be in column-major order with 4x5 pixel "bits". A dark bit is 0 and light is 1. There also seems to be some kind of CRC/ECC.