That's pretty neat. Looks to me like you've got things lined up really well based on the streets.
I've not played with google maps overlays, but I can say that gif's support a transparent layer (jpegs do not). So, prior to importing into google maps, you might try converting to a gif (if not already that format) and making the background transparent (usually based on the color select tool).
I hope this helps
Greg
Greg Coit
Bayfield, CO