An element containing a JPEG image has an XML schema definition like this:

<?xml version="1.0"?>
<xs:schema xmlns:xs="http://www.w3.org/2001/XMLSchema"
           xmlns:tns="http://example.com/know-type"
           xmlns:xmime="http://www.w3.org/2005/05/xmlmime"
           targetNamespace="http://example.com/know-type">

<xs:import namespace="http://www.w3.org/2005/05/xmlmime"
           schemaLocation="http://www.w3.org/2005/05/xmlmime"/>

<xs:complexType name="Item">
  <xs:sequence>
    <xs:element name="JPEGPicture" type="xs:base64Binary"
                xmime:expectedContentTypes="image/jpeg"/>
  </xs:sequence>
</xs:complexType>

<xs:element name="Picture" type="ItemType"/>
</xs:schema>

To create XML content and to marshal an instance document containing an image you can write code to create an object of type Image and set its reference in the appropriate element of the content tree:

BufferedImage bimg = ImageIO.read( imgFile );
Image img = bimg.getScaledInstance( 512, -1, Image.SCALE_DEFAULT );

// Create the Item element and store the image reference
ItemType itemEl = of.createItemType();
itemEl.setJPEGPicture( img ); 
JAXBElement<ItemType> jbe = of.createPicture( itemEl );

// Get the image from the content tree.
JAXBElement<ItemType> jbe = ...;
Image img = jbe.getValue().getJPEGPicture();

// Draw it
Graphics g = ...;
g.drawImage( img, 0, 0, null );