The image is inserted to the left of the forum description, even though it can be placed anywhere on the row of that forum if you want. It is just a matter of placing the "{$forumimage}" where the picture should go.
You can have a different image for every board, you just have to name them after the boards Keyword. This board would have an image called "integration.gif". If no image for the forum exists a default image "board.gif" is inserted instead, if it exists. This way you can have the same for all boards if you want to, as well.
If you want it to be a background image instead you could use the variable {$fimage} instead and place it in the background attribute of the table where you want it to show up.
I can't show you a working version of the hack right now, since my server has a little too much load at the moment. Maybe in an hour or two. In the meantime you can look at how it could look like at JustDaves test board:
http://www.chattersonline.com/test/ubbthreads.php?Cat= It's not the same hack, but it looks the same. =]
Maybe the default image could be based on the category name, to have a different default for each category? It's a quite easy fix for those who want's it I guess, just add another line setting the name of the default image right below the category loop.