Yesterday, when I made this change, I started to receive multimedia messages, but with the message "go to fido.ca/photos to retrieve it". This was better, but still not great. This morning, I was about to investigate the problem again, but I sent a test message first, and now it works perfectly. Picture messages are sending and receiving no problem! Not sure why it needed to bake over night, or what changed from last night to today, but it works!
The other thing I did, but don't think it would make a difference to this issue, was download Handscent from the Android Market. This fixed the timestamp issue I was having on the received messages. I know a lot of people have this issue with unlocked phones on Fido. However, picture messages are being received normally through the standard messaging app and Handscent app, so I believe it was the APN settings that fixed the problem.