To answer the previous question, I heard that it somehow locks onto key facial features like your nose and ears, so taking a picture of your a$$ won't work (though I haven't tried myself....)
To answer a couple of other questions that didn't get answered yet:
1) Yes, you can apply the camo face paint and the scars to the custom face. (Though, oddly enough, some of the hats don't work....)
2) Activision's World Series of Poker also allows face-mapping.