Hmm, I wonder if that "../LARGE-BG-IMAGE2.jpg" is what’s causing our problem with viewing it. Presumably this file will be outside of the web viewable folder and could be triggering the 403. Maybe changing it to "images/LARGE-BG-IMAGE2.jpg" would help, and putting the file in folder with web readable permissions called ‘images’ off the html root.
I’ll have to look up the article with regards to the background image resizing, but for background images it’s often a lot easier to put the source elements in the CSS itself, rather than the markup.
For future notes, I would keep your filenames restricted to lowercase and alphanumeric characters, having %20s in your links isn’t great form and might be contributing to the PR dive too. There’s a great article on 30 tips for writing markup on http://www.nettuts.com at the moment which has some excellent pointers (altho doesn’t specifically mention filenaming schema).