Maybe this is news to only me, but I had no idea until a couple of minutes ago that when you choose a picture in the Organize portion of iPhoto and click the Desktop button, the position of that picture is determined by the settings in the Desktop & Screen Saver system preference. If Tile, for example, is selected from the popup menu in the Desktop area of this system preference, that’s how your picture is displayed.
This little tidbit may come in handy if Fill Screen is set in the Desktop & Screen Saver system preference and you’d like to see more of your picture. To do so, select Stretch to Fill Screen from the popup.