Put the files into minecraft.jar 
delete META-INF etc etc


Press U to bring up the list of mobs
Press Y to bring up another GUI in which you can decide what individual players look like. These names will be saved in .txt files which you can edit manually. They'll be in the .mincraft directory.
If you want to edit the mob/player files, you'll need to generate them first, but once you have them, just add names on new lines. 

Notch's update has complicated things slightly, there will be bugs... I'll try to fix them.