You can try livestreamer. I had to do a bit of work to get Python libraries installed to be able to view the higher def stream on Ubuntu. There are prepackaged Windows binaries that might not have that problem, I haven't tried them.
I'm using it right now to watch the ISS feed directly in VLC at 720p. The command is
livestreamer http://ustream.tv/channel/iss-hdev-payload 720p+ --player vlc
Finally, use VLC's wallpaper mode as explained in André's post.
Thanks to this tutorial about streaming the ISS feed on the Raspberry Pi, which pointed me in the right direction.
