In addition to image filtering in the spatial and frequency domains, fractal characteristics induced algorithms offers considerable flexibility in the design and implementations of image processing solutions in areas such as image enhancement, image restoration, image data compression and spectrum of applications of practical interests. Facing up to a real-world problem of identifying workpiece surface defects, a generic adaptive fractal filtering algorithm is proposed, which shows advantages on the problems of target recognition, feature extraction and image denoising at multiple scales. First, we reveal the physical principles underlying between signal SNR and its representative fractal dimension indicative parameters, validating that the fractal dimension can be used to adaptively obtain the image features. Second, an adaptive fractal filtering algorithm (Abbreviated as AFFA) is proposed according to the identified correlation between the image fractal dimensions and the scales of objects, and it is verified by a benchmarking image processing case study. Third, by using the proposed fractal filtering algorithm, surface defects on a flange workpiece are identified. Compared to conventional image processing algorithms, the proposed algorithm shows superior computing simplicity and better performance Numerical analysis and engineering case studies show that the fractal dimension is eligible for deriving an adaptive filtering algorithm for diverse-scale object identification, and the proposed AFFA is feasible for general application in workpiece surface defect detection.