Yes, background wallpapers can be animated.
Whew! Now on to what I've been doing with backgrounds since yesterday ... When I sat down with Zack a while back and wrote down all the things that would be needed from backgrounds, it started to become apparent that I would simply be rewriting the Applet class: plugins, config pages, mimetype associations (so different background file formats can be supported by different plugins) ...
I also had another problem to solve: what to use to group applets for zooming, multi-screen, sharing the Corona between the desktop and panels, etc. When Zack said, "The backgrounds should be QGraphicsItems ..." it became natural / obvious to make the connection between the backgrounds and the need for a grouping class.
So I've been working on a class called Containment. (Get it? Plasma containment? oo-hoo-hoo!) It's just an applet registered with the Plasma/Containment ServiceType, but also provides for grouping. Containment now hosts the FormFactor and other constraints, so there can be multiple constraints sets in one Corona which is needed to share the Corona between multiple visualizations (e.g. panels or whatever). Essentially, Containments are full-screened (or full-panel) applets that always sit behind the other applets.
It'll be interesting to see what kinds of background plugins people come up with. Zack said he wanted to do one, so maybe we'll get some posh out of that.
Anyways, I'll put a screencast together showing this stuff in action which might help make things clearer in case the above was too obtuse. ;) And yes, I know, it's just backgrounds (well, and grouping and what not) and I'm all excited about it. But .. but .. animated wallpapers! ;)