It's really easy, you can set the medallion for a Sov (or any other champion/unit) like this if you want to give it a go...
1) Get your image, resize to 256 x 256 and save it in png format to your LH Mods\Gfx folder.... it will be a location something like this:
C:\Users\Master\Documents\My Games\LegendaryHeroes\Mods\Gfx
Call the file portaitofmycoolsov.png or whatever you like.
2) Find the xml file that specifies your sov, so go create a custom Sov using the workshop, then exit the game... go and look in you Units folder which will be a location like this:
C:\Users\Master\Documents\My Games\LegendaryHeroes\Units
Find the file called MyCoolSovName_1245678.xml and open it with notepad (or your favorite text editor). The file name won't be exactly like this but you should be able to find it.... it will start with the Sov's name then have some rubbish and have a .xml extension.
3) There will be a line in the xml file that looks like this:
<Medallions InternalName=""/>
Replace it with these 3 lines:
<Medallions InternalName="">
<All>portaitofmycoolsov.png</All>
</Medallions>
Using the filename of the portrait image you saved.
4) Done. Start game.
This does not change the image use when you trade items, or in diplomacy.... those are all real time renders of the 3d model. It changes the "medallion" image... which is the portrait used in a bunch of places, basically anywhere where it's in a round frame.
Some examples of one I just did to verify this works:
