Yes... you can specify an image anywhere you would specify a background color. Whenever you see a line like this (with any color specified):

background-color: WHITE;

You can replace it with:

background-image: url('http://www.somesitename.com/image.jpg');

You may notice that a background-image line already exists in your palette file but it is commented out with /* and */. You can remove those comments (see the other post in this blog regarding comments) and specify a image url.

You must have your background image stored on the Internet somewhere, such as an image hosting service or in your Blogstream gallery.

There are some great websites for finding Gallery images. A few are listed below, but please make sure to read the rules (usually "Terms") on any site you visit to make sure you are using the images properly and within the rules.

Background City - You can use these images for free, but you must copy the image to another webserver (you cannot link to their website directly) and you must place a link in your blog mentioning you use them.

Free Background Images - Same here, you need to put a link back to their site and copy the image to another location.

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If you do not have any other place on the web to store your background image, you can store it in your Blogstream gallery. After uploading the image to your gallery, view your gallery and click on the "URL" link under the image. This will tell you the URL to use to refer to your image. (Unfortunately you will have to copy it manually at this time... we are working on a way to fix that.)