Quick lesson on resolution.
Resolution is simply a result of multiplying the pixels across and image by the pixels down an image. Meaning, your example of 1024 x 685 has a finite resolution of 701,440 pixels. That's not even 1 megapixel (1,000,000 pixels). What will matter is how compressed these pixels are.
Technically, if you had a 1 megapixel camera that has great optics and great algorithms in saving the image, you'll have more than enough of an image to be able to make nice wallpapers. But good luck finding such a camera.
The Digital Rebel XTi has a max resolution of 3888 x 2592, which is far bigger than your wallpaper size of 1024 x 685. When you are scaling it down to wallpaper size, make sure you choose the appropriate compression level. A highly compressed image will lack that "fine resolution" that you're looking for. You'll want to save the image with very little compression.
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