The shul where I daven has recently put of photographs of seven Rebbes on the wall that faces away from Yerushalyim. Nobody faces the pictures during davening, except for the end of Lecha Dodi and the Cohanim when they go up to bless the kehilla. Is this a problem? I have never been in a shul that has photographs of people on the walls.
There is no strict prohibition against that (Responsa Simchat Cohen OC 44) though most shule prefer not to have any photos on the walls. (Tzitz Eliezer 19; 8) I have seen in more than one Chabad shul a picture of their Rebbi hanged on the wall.