I personally wouldn't care about video or sound - if I were making a digital picture frame then it would likely be purely for photos.

As such I'd stick a small linux distro on it with X, and autologin and run "xv -maxpect -wait 300 -wloop -root -rm 5 /path/to/photodir/*.jpg"

SImply adding or removing photos to that photodir would add or remove them from the display.

-maxpect   Scale to maximum size whilst maintaining aspect ratio.

-wait 300  Load next image after 300 seconds.

-wloop     Loop to beginning of image list when at end.

-root      Display in X root display, not as window.

-rm 5      Center image, non-tiling. 

Obviously, this doesn't help you much, but it might be useful for somebody wanting to do something similar.