I'm hoping there is a simple way I can do this, so here goes...
I'm working on a site, in which the front page has 8 images that are going to link to interior pages. I would really like to have some sort of hover, rollover, mouseover effect to visually show the activated image. I would be OK with either the background area surrounding the image changing color (simplest I think?) or having the image area switch out to another version of the image I can create, or having some type of transparency/opacity applied to the image...

Currently these images have been placed in the widget areas using the "Simple image" widget as I felt that would be easiest for the customer in the long run rather than using a text widget.

I would prefer to do this via css if at all possible, however I'm at a complete loss as to how to go about it.

I'm running Atahualpa 3.5.3 & Wordpress 3.0.1. I've searched for a plugin to do this, but haven't had any luck. I saw one thread where someone mentioned they were trying to build a plugin like this, but it appears to not have been finished or released.

I'm not sure if this is part of TinyMCE editor or if you have to install TinyMCE Advanced but somewhere in there is a an editor button for images that looks like a tree. In the advanced properties of that method of adding an image is a rollover. Here is a screencast of what I am talking about.

Thanks Larry! I had TinyMCE installed but I never use those advanced image options. So what I did was use the tutorial you provided to create an image in a post with a rollover effect I wanted after uploading a second image. Then I went to HTML view & copied the code. I just used that code in a text widget, changing out the images & link urls.

I would prefer to have it as an option to an image plugin/widget, but using a text widget worked. It's just a little messier for making changes down the road.

I'm honestly shocked that this isn't an option in any of the image handling widgets I've seen. Seems like a no-brainer to me to add those extra options.

Anyway, thanks again for your help!