if your friend paints substantially similar copies of someone else's photos of famous people, she'd be violating the exclusive "publicity rights" of the famous people to exploit their own images, as well as the exclusive copyright rights of the photographers to copy, alter, distribute, etc. their copyrighted photos.
There are exceptions to these rules, and they involve balancing the painter's 1st Amendment rights to express themselves and create art. They require that the painting "parody" the person, "transforming" the images into something unique to the painter, and making a social or political comment about the famous person.
If those exceptions don't apply, then your friend is proposing something that is likely to get her successfully sued by the famous subjects and/or by the photographers.
No, the can't just change the colors of the photograph, or a few other details, if the painting is still "substantially similar" to the original work. Shepard Fairey is currently in litigation over some Obama photos that he added color to in making his iconic "Hope" images, and while his graphic may actually be "fair use" and transformative, right now it looks like he's infringed the photographer's copyright. Obama didn't sue Fairey, so the publicity rights aren't at issue in that case.
You're friend should hire an IP lawyer before embarking on a risky painting business.
Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on, since each state has different laws, each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship.
Just to add to Pamela's response, every state has different "right to publicity/right to privacy" laws that may effect your outcome, so make sure you speak to a qualified practitioner in your area who is familiar with these concerns as well as copyright issues regarding the images themselves.
