Benson,
1) For a normal Like button, only users that are logged into Facebook will see the faces of their friends that have Like'd the page. They won't need to be logged into your site using Facebook, but they will need to have Facebook open. Also, again, it will only show their friends faces, not all faces.
If you have a Facebook Page, you can use the JFBCFan module to show faces of all users that have Like'd your Page. That also works if the user is not logged into Facebook.
The above is simply how Facebook works and not something we can change.
2) For the Like button, you can't. It's meant to have very familiar faces in it (the user's friends) and it's not meant to take up a lot of room. So, Facebook doesn't have any option to show larger pictures.
I hope that helps explain,
Alex