Ok, I will make a step by step instruction, with screenies all the way. I tried it myself and it works
Step 1: Go to your minecraft.jar (You know how to do this I assume)
Step 2: Open up minecraft.jar USING WINRAR
Step 3: Scroll all the way down to your terrain.png, no need to go to folders, just scroll down past the class files
Step 4: DELETE the terrain.png
Step 5: Put in the new terrain.png
NOTE THE FILE YOU PUT IN MUST, be called terrain.png