Create transparent pngs or gifs for the circle backgrounds for discount ranges (0-20 - yellow, 20-40 red),
Use absolute positioning in categories product list to put them over the product images,
Use this formula to calculate discount percentage in template/catalog/product/list.phtml:
Im going to build this Modification and then post it lateron..
But first need my shop to be competely restyled! Im going to do an extreme makeover, which it will no longer be detectable as magento..
post my results this week or next week.