Oh yeah! Projection paint is a nice addition in the  Blender 2.49 release. Watch the vids here, Covers pretty much everything you need to know to get it done.

wiki.blender.org/index.php/Dev:Ref/Release_Notes/2.49/Projection_Paint

It's probably one of the easiest to accomplish tasks you'll ever try in Blender.

If you try it after watching the videos and run into a snag give me a shout. If I can't walk you through it I'll direct you to some other info on using projection renders to create textures.