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Not sure if you know this or not, but when you select a picture to be your wallpaper, it gives you a small area to select (which you know) but that area can be adjusted by moving the borders of the yellow box. Have you tried this? I know for most of my pics, the box can be expanded in such a way that it encompasses the vast majority of the picture. Hope this helps!
Launcher Pro will do this.As someone told me before, keep it at 480x854, expand canvas to 960x854 but you need a launcher to disable the wallpaper scrolling