Does the "Use Desktop Background" option work with special wallpaper management apps / scripts or applets that periodically change the wallpaper / the firefox "use as wallpaper" function?

It doesnt matter how the desktop background is changed as long as it actually changed (the gconf key is triggered) which all those programs should do (at least the common ones). In other words: The only way around the xsplash background daemon is to replace the image file that is set as desktop background with another image file of the same name.