I use the image shader all the time with fake rocks. You don't use the Object UV projection though, the Plan Y works the best unless the rocks are on a really steep slope, in that case you would use the Side X or Z projections.
Make sure the Repeat x and Repeat y boxes are checked in the "Flip, Repeat" tab.
When you choose the image it helps if it is seamless. There is a free program called
Gentica Viewer ,it can make some pretty cool textures that you can vary for different scenes, below is the site.
http://www.spiralgraphics.biz/packs/index.htmThe last thing you will have to do is scale the image so it works with the image (the default of 1 is too small)
I usually start with 10 of course the size of the image will determine allot especially if you use an image that is small in size i.e.. 256x256 or lower. When you scale these up you just scale up the pixels, which looks bad.
Hope this helps.