I actually came across this same problem recently and ended up with a slightly different approach (I wasn't able to use background images). It does require a tiny bit of jQuery though to determine the orientation of the images (I' sure you could use plain JS instead though).
I wrote a blog post about it if you are interested in more explaination but the code is pretty simple:
HTML:
<ul class="cropped-images">
<li><img src="http://fredparke.com/sites/default/files/cat-portrait.jpg" /></li>
<li><img src="http://fredparke.com/sites/default/files/cat-landscape.jpg" /></li>
</ul>
CSS:
li {
width: 150px; // Or whatever you want.
height: 150px; // Or whatever you want.
overflow: hidden;
margin: 10px;
display: inline-block;
vertical-align: top;
}
li img {
max-width: 100%;
height: auto;
width: auto;
}
li img.landscape {
max-width: none;
max-height: 100%;
}
jQuery:
$( document ).ready(function() {
$('.cropped-images img').each(function() {
if ($(this).width() > $(this).height()) {
$(this).addClass('landscape');
}
});
});