There should not be any differences on how the game works with those pictures except for a few.
Like Drows vs Dark Elves.
Setting pictures on this game is slower than the previous game because there are more pictures displayed in the previous one so less scrolling. Of course it's a bit harder to see them as they are smaller on screen when selecting pictures.
I don't know if there is a size that the pictures need to be but I keep them relatively small so they can be loaded faster, there wasn't any visible loss in quality when the portraits are 139x139 pixels.
View attachment 1355774
Like this portrait for example
So yes, you can absolutely use character pics from the previous game, you just gotta point them to where you placed the pictures.
I just made all of them smaller so I can load up the list much faster.