PNG as a background?

As a fan of both tikz and background, here's a version showing four different opacities:

Code

\documentclass[parskip]{scrartcl}
\usepackage[margin=5mm,a6paper]{geometry}
\usepackage[angle=0,scale=20,opacity=1,color=black]{background}

\usepackage{lipsum}

\backgroundsetup{%
    contents={%
        \begin{tikzpicture}
            \pgfmathsetmacro{\myopacity}{mod(\thepage-1,4)*0.25+0.25}
            \node[opacity=\myopacity] {\includegraphics[scale=1]{avatar.png}};
        \end{tikzpicture}
    }
}

\begin{document}

\lipsum

\end{document}

Output

You just have to run pdflatex twice for the transparency to kick in for your original tex source. The package actually prints out a message to say that when you run it the first time.