I'm just a humble newbie, (well, to serious editing anyway, although I've been dabbling for well over a year), but I was working on this very problem today, just thought I'd throw in my experiences. Firstly, if you want to set it as the custom face, it goes in the user folder (not user/mission), and you type:
this setface "custom"
That should do it. If you don't want to make it your default custom face, you need to PBO the JPG and add it to your addons folder. The way I did it (somewhat haphazard, but it worked; you need a PBO tool though) was to download one of the face packs (the packs, not individual JPG's) and then just unPBO, copy and edit the config.cpp file (I know NOTHING about that kind of thing, but on this basic level it's fairly straightforward), put the config.cpp and JPG folders in the same folder (say, "newface") and use a PBO tool to make a PBO file and send it to your addons folder. Worked for me. Maybe I've explained it badly, but that should do the trick unless I've totally misinterpreted your question (wouldn't be the first time....)