the way i install them is through iBrickr (or any iPhone browser app) to install the icons...
all you do is go into each individual app folder in "applications" and delete the "icon.png" and replace with the corresponding "icon.png" on my theme....

that is all...
don't froget to reboot in order for the new ones to take action...
i still have 1.0.2 firmware just because i find the 1.1.2 jailbreak to long and i guess..complicated, plus then you have to re-install some main iPhone apps....i just don't have the patience i guess....
1.0.2 does it for me...of course until an easier and less complicated method of jailbreaking 1.1.2 comes out..