Cheap LCD sources (Score 4, Informative)

eio has a few alternatives towards the bottom of the page (starting with the 5L-U4E). They range from $99 to $350 in with sizes 5", 6", and 12" available. Most of these accept an NTSC signal, so you could interface one with a cheap PC fairly easily. Unfortunately, all the color displays appear to be sold out right now. With a little bit of digging, you might be able to find another supplier of the same or similar products, or they might get more in stock sometime.

Also, Lik-sang has both a 5" and 7" LCD display for $99 and $199 respectively. The 5" is a PS One display that accepts NTSC/PAL, and the 7" is a more standard NTSC/PAL display. The latter has additional features like an screen orientation flip (so you can mount it however you like), speakers, and a battery slot. This would probably be my choice for this type of project.

Don't disregard the 3Com Audrey, however. You wouldn't even have to hack the thing to get it running as a picture frame. Just plug it into your network and use the browser to display the images from another server that is doing all the work. The browser has a full screen mode that is pretty well suited for this. I should know because one of mine was displaying a pr0n slideshow for a while :-). With a little bit of php/perl/asp/etc programming, you could make a very flexible (with respect to image size, delay between images, etc) solution that could behave exactly how you want.