GalCiv 2's method worked well enough, but messing around with it and GalCiv3 gave me a few ideas. Namely how to make using custom race images easier. Break the leader portraits into three types. Figure, Wallpaper, and Splash.

Figure being inserting an image into the game that is on a pure white background. In GalCiv2, you would end up with a pure white background in the diplomacy screen display as well. Instead, have the figure images cut out the empty space and place the remaining image atop one of the game's already present pre-rendered backgrounds. This would prevent massive blobs of pure white.

Wallpaper being what Civ V uses. You take an image, it spreads over the entire screen. Done.

Splash is somewhere between Galciv3 and Galciv 2. Taking a prerendered background from Galciv3, and placing the image on a rendered "monitor" in the prerendered background ala the diplomacy screen from Galciv2. This is mostly for using smaller, detailed images without breaking the game. The monitor fills the place of the leader figure, and as such could come in multiple screen sizes to make it very easy to use odd sized image, due to a minimal level of image editing required to fit something like a 480x300 image into a 400x300 window.

This would allow players to use all size and manner of images without expert level image editing ability, and thus make the creation of unique custom races very easy and streamlined, even moreso than galciv2 as almost any image size would be supported, at least to a degree.