How to "crop" a rectangular image into a square with CSS?

I know that it is impossible to actually modify an image with CSS, which is why I put crop in quotes.

What I'd like to do is take rectangular images and use CSS to make them appear square without distorting the image at all.

I'd basically like to turn this:

Into this:

Assuming they do not have to be in IMG tags...

HTML:

<div class="thumb1">
</div>

CSS:

.thumb1 { 
  background: url(blah.jpg) 50% 50% no-repeat; /* 50% 50% centers image in div */
  width: 250px;
  height: 250px;
}

.thumb1:hover { YOUR HOVER STYLES HERE }

EDIT: If the div needs to link somewhere just adjust HTML and Styles like so:

HTML:

<div class="thumb1">
<a href="#">Link</a>
</div>

CSS:

.thumb1 { 
  background: url(blah.jpg) 50% 50% no-repeat; /* 50% 50% centers image in div */
  width: 250px;
  height: 250px;
}

.thumb1 a {
  display: block;
  width: 250px;
  height: 250px;
}

.thumb1 a:hover { YOUR HOVER STYLES HERE }

Note this could also be modified to be responsive, for example % widths and heights etc.