Here are my Multiple User findings:
1. Multiple Users version 1.1 does retain individual User appearance preferences, yet it eventually becomes unstable, eventually overwriting either the User's appearance pref's or the OwnerŐs appearance pref's with the otherŐs prefŐs.
2. Multiple Users version 1.3 and later 1.3.1 is very consistent in only honoring the Owner's appearance pref's, In other words it always rewrites the other user's appearance pref's with the owner's appearance pref's.
All of that being said, here's the workaround...
Login as the Owner and remove these three files:
(Save themÉ do not throw them away you will need them later!)
[Multi-User Startup] Extension version 1.3 or 1.3.1 from the extensions folder
[Login] version 1.3 or 1.3.1 from the system folder
[Panels] version 1.3 or 1.3.1 from the system folder
Replace them with the version 1.1 files of the same name.
I found the files here: http://members.nbci.com/robo_x/MU1.1.sit
and here: http://hem.passagen.se/robo/MU1.1.sit
Now Restart your system. Once restarted login as each user and set their appearance preferences. Now as the Owner remove the three version 1.1 files and save them (you will need them later if you wish to alter the UserŐs appearance preferences again in the future). Now replace them with the version 1.3 or 1.3.1 files and Restart. Hopefully you will find as I have that each userŐs desktop picture has been saved according to the way it was set. The down side is that you still cannot change any of the UserŐs appearance preferences without following these steps again.