Theming blocks in Panels
Just some ideas:

I use the Fieldable Panels Panes a lot on smaller web page to add direct content to the Panel pane instead of having to create content for it first. FPP are entities. Maybe you can use for a user to add images (and text, files, etc.) to their profile page? Honestly, I've only used it on site building level.

I know about this module Classy Panel styles, but never used it. Maybe you can also set the permissions that users can use the pre-defined styles.

There is also a widget type module (as used in Atrium) where a user can move blocks (Panel panes) around. I don't have a link for that.