Boot splash woes after Natty update.

Actually, the title is possibly misleading as I can't say the update was the cause.
The truth is that ever since I clean installed Ubuntu Natty Beta a week or two ago on the Dell E520, I had never installed a boot splash.
But, today I came across this thread which explains a very simplified way of getting a quality boot splash in the Grub2 menu.
Seems you can now use a variety of image types including .jpg, .png and .tga of any size. Not only that, but to make your chosen image show up as a boot splash, you only need to drag and drop the image to the /boot/grub/ folder and then run (as root) update-grub.
What could be simpler?
Remember the days when (this is Grub1) we had to use Gimp to downsize an image to 640x480, reduce it colors to 14 and save it with a .xpm extension.
Next you had to gunzip this file to get a image.xpm.gz file. Finally, you manually wrote the appropriate code in the menu.lst file.
Worse, the quality of the bootsplash was very poor because of the limited colors.
The, perhaps the only, major advance in Grub2 has been the ability to get high quality boot splashes.
And now, it's even easier?
Except, it doesn't work for me on the E520 at least.
First, dragging and dropping images to /boot/grub/ is only possible if you open your file manager as root.
As you must do this through a terminal, you might as well use the command line to copy your images to /boot/grub.
Worse, however, is the fact that .jpg images just didn't work at all for me. Even though, "update-grub" finds the image and identifies it as a background and the appropriate code shows up in /boot/grub/grub.cfg, on reboot the boot menu is sans splash -- just a black background.
Don't know how universal is this problem, but I got the same result with three different .jpg images (and yes, all were RGB and 8-bit images).
I had better luck with .png and .tga images in that at least the splash appeared. However, its quality was very poor, even worse than the old .xpm.gz images.
From what I could see with a very limited number of tests, the splash quality improved when the image resolution increased although it remained excruciatingly poor.
I also experimented with placing images in /etc/default/grub and in /usr/share/images/grub but the results were just the same.
This thread of just a day or two ago alludes to more or less the same problem in that others have found that many jpg images don't show up in Grub 1.99.
However, nobody seems to have commented about the splash, even when it does work, is of very inferior quality.
This has to be a bug so I'll just wait until it's solved.
Incidentally, I have Natty Beta 1 on my EeePC 901 netbook too, and its bootsplash is perfect.
Why? Right now, I've no idea.