Currenty we modify image.php at line 295:
From:
imagecopyresampled( $wmnew, $watermark, 0, 0, 0, 0, $wmratio[‘w’], $wmratio[‘h’], $wminfo[0], $wminfo[1] );
To:
imageSetTile($image,$watermark);
imagefilledrectangle($image,0,0,$info[0],$info[1],IMG_COLOR_TILED);
Maybe this could be integrated as a selectable option in a next release.