The instructions are in the MCPatcher thread, in one of the spoiler boxes:
Balthichou's RandomMobs mod is now included by default. You may include multiple skins for the same mob and the game will automatically pick one at random. Add a number to the end of the filename before the .png, e.g., /mob/creeper2.png. Start at number 2 and do not skip any numbers. For the wolf textures, make sure you include the same number of wolf, wolf_tame, and wolf_angry textures or it will look strange when a wolf changes moods.
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Updated for 1.2.5
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Meanwhile, updated for 1.2.3. Just replacing a water texture with the Jungle sapling, and added few more values for the Custom Colors mod.
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Here's his gallery link.
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Couldn't wait for 1.2 final!
Download link in the Original Post!
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If you use the colors mod, you can use a biome palette image for the sky - misc/skycolor0.png. Same kind of thing as the trees/grass/water palettes.
I asked before about more options, but my post got lost in the middle of an argument:
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Light link fixed!
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EDIT: Updated 25-12-2011 - Free moment at Christmas
Moments after releasing the pack last night, I now find there's code for fixing lilypad / biome colouring in the new MCPatcher.
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By the time I finished pre5, along came pre6!
Minecraft 1.0 is nearly here!
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What causes this? It seems MCPatcher has a fix for it now, which i'll look into, but i'd rather it worked in Vanilla!
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Only a few textures changed this time.
Dragons may look pants, I haven't tested those.