Thanks to Reversing Everything: Hacking the Kindle here us how you can create custom screensavers for your Kindle.

Attach the Kindle via USB. On either the mounted Kindle drive or the mounted sd card, create a folder called "pictures". Inside of that folder create a folder called "screensavers".

Add your pictures to the screensavers folder. For best results, your photos should be 600x800.

While in the Kindle's home menu, press alt-z.

This will create a new book called "screensavers". Open it. You'llsee each of your pictures. You can advance through them with the prev. page and next page buttons. On each photo, press Alt-Shift-0 to set the viewed picture as one of your screensaver pictures. Press it only once.

This will replace the kindle's native screensaver pictures with your own. If you're unhappy with the new screensaver pictures, mount your Kindle again and delete the screensavers folder in your Kindle's root folder (note that this is not the one you created in your picturesfolder; the Kindle creates this folder when you press alt-shift-0). After deleting the folder, you'll have your original kindle screensavers back.

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