I've created an account just to tell you guys that after going through all this, I finally got mine working.
what nobody mentioned here is that your screensaver files need to have the proper naming conventions.
I can't remember exactly what it was, but follow what the original png wallpapers were called. and just add to the numbering convention.
when you restart your kindle make sure it is NOT plugged into the USB, otherwise it will just use the old wallpapers when it boots back up.
I've tested it a few more times and yes. if you restart while plugged in, it uses the old wallpapers, and when you restart when its not plugged in, it will use your custom wallpapers.
so, in short.
use the proper naming convention, and make sure it's not plugged in when you reboot.
cheers.
