Let's assume for a moment that you're not a masochist and don't want to swizzle the texture afterwards. In that case, you will need a PS2 portrait file, any will do.
You create your custom portrait art, turn it upside-down, and export it from Photoshop or GIMP or what-have you, as a 64x64 8-bit indexed DDS. You then follow my old PS2 skinning tutorial (found in the Knowledge Base someplace) to inject the new texture data into that PS2 portrait file, rename it to the new character code (i.e. if it's gonna be Ultimate Deadpool, you rename it to hud_head_1702.igb), and replace the old portrait (I assume we're not talking creating brand-new characters just yet) with it. One way is to steal the portion of the .FB you took it from (including not only the IGB itself, but also the 196 bytes of pre-header that tells the game engine what this file is and how long it is); another - more tedious, but unavoidable if you didn't take the portrait of the very same character's very same skin as base - is to decompile the PSP .FB you're modifying, replace the portrait, and rebuild the .FB afterwards.
If we ARE talking swizzling, it's easier and harder at the same time. You only need to open the .FB with a hex editor, and extricate the portrait art and palette, again, accoring to my PS2 skinning tutorial - just bear in mind that the texture you're extracting is swizzled. Copy its contents into a pre-made empty 16x128 (it's important!) 8-bit indexed DDS, unswizzle (the texture you then open in your DDS editing software will appear as a list of blocks of image; just copy and paste them one by one, filling the mosaic out, it's easy to get the hang of it, especially on such a small picture). Edit it, then re-swizzle (you should have figured out the principle by trial-and-error at this point), and re-save that 16x128 indexed DDS. Then, again, via hex-editor, copy the new data into the FB and you're all set.
If this sounds too confusing, say so, I'll make piccurs
PS2 method is more tedious because you'll spend more time reinjecting the file; the PSP method is more unwieldy because of the swizzling. Also, the PS2 uses 64x64 portraits, while the PSP relies on only 32x32. The sharpness difference is vast, I've posted an example earlier in this thread.