You can replace the paintings made by sims with ones of your own using the instructions and templates provided by SaraMK at MTS2, but the paintings are assigned to certain skill levels I believe (you always get the same one at level 0 and so on). There are 12 paintings in total but only eleven skill levels (0-10) so presumably some variation is possible in the sequence of paintings. The game will always see the same 12 paintings regardless of what image you replace them with, and price them according to skill level. Of course, you can make multiple versions of each if you want more visual variety in your game, but be sure not to have more than one of each painting in your game at a time.
Instead of creating global replacements, you can change individual paintings "on the fly" once your sim has the ability to paint a portrait or landscape. When you press the C key to 'take' the picture, the image is stored in the main Storytelling folder as a file called snapshot.bmp. Once you've snapped the pic, exit the game and replace that image with one of your own choosing. You need to do this before you take any other pictures in your game, since this file shows only the most recent picture you've taken (in other words, it continuously updates as you take pictures). You will notice that the image seems squished, because the game compresses the normal 600x900 image as a 600x450 image. So to prepare a replacement image, size it to 600x900 (preserving the proportions) and then change the image size to 600x450, being sure to
NOT constrain proportions (or whatever your image-editing program calls keeping the original ratio when resizing).
You can also use the squished snapshot.bmp image to make buyable painting recolors by resizing it to 600x900 (again, do not constrain proportions) and then reducing it to fit the Lady on Red template available for the Photo Studio function in SimPE, thus: