One way I prefer to get around the strange dealings with using a background image, is to just a background 'plane' object and attach the pic to that as a texture. Then push the plane back in the image so it is behind your foreground items. Can be a problem with shadows being cast on the image though, so you need to tweak it depending on your scene. Then you can re-scale the background plane to whatever dimensions you like to make it show up nicely. If you use the background image feature, you either have to make your image the same size as the background, or else you get non-textured strips where it doesn't fit exactly.