There is a way to change the background image on game selection when you "mouse over" a game. In a previous post about how to extracting image from PSP games, has described the location of the background image file stored on game.iso. The image is named PIC1.PNG with resolution 480 X 272 px, then we can change the background mentioned with images that fit with your taste. As an example I will change the background image Dissidia duodecim 012 Final Fantasy game.

Original picture is like this:

Then we will replace it with this picture:

To note is name and resolution of the image that you use must be the same to original background within the game. So rename pictures you use to PIC1 in PNG format, and set the resolution of 480 x 272 px.

The next step is to insert the picture into a game.iso. To open the ISO files we need the UMDGen. This application can be downloaded here. Run the application on your computer, then open the ISO file using menu open, it will display the contents of the game.iso.

Go to directory PSP_GAME, there appear PIC1.PNG image file.

The method to replace the background image file is to use drag and drop technique. This process can be successful if the image you'll use as a replacement has been given the same name as the original image inside game.iso. And then there is a dialog that asks if you are going to replace the file, choose yes.

After replace process is completed then we save as the game into memory stick. You can see the changes of the game in the PSP, when you "mouse over" a game on XMB menu.