Customizing system icons is one of the best was to personalize you Mac. There are many tools and techniques to accomplish this task but here are the best ones out there.
LiteIcon (Free)
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LiteIcon is a free icon changer with a simple clean interface. Just drop the icon you would like to use into the well of the item you would like to change. Such as folders, Dock items (Finder, Trash, Dash Board) Devices etc.
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Then apply changes and relaunch the Finder, log back in and TaDa! New icons. The only drawback to LiteIcon is that it has no option to change application icons.
Applying Icons with the Finder
Although LiteIcon does not change application icons there is still a free way to do this using the “Get Info” contextual menu.
To do this simply right click on the icon you would like to copy and click on the icon on the top left of the window:

After making sure the icon is selected (has highlight color around it) Do a Command C and then “get info” on the application that you would like to change the icon of. In this example Address Book. Once you select the little icon at the top left do a Command V and your icon with have changed.
From This:

Into This:

If the application you have modified is in the dock you may need to remove it and reinsert it again for the changes to take place.
CandyBar ($29)
Aside from not being free CandyBar is an incredibly powerful icons application offering a whole slew of features including application icon optimization, excellent icon organization, Dock customizations and much more.
Using CandyBar is as simple as importing your icons and dropping them into the respective icon wells.

Finding Icons
Here are a few good places to get icons for your system.

{ 3 comments… read them below or add one }
Thanks for this. Going to try to customize my dock icons now!
Is it possible to change the Finder icon as well?
If so how is that done?
Thanks a million!
i already did it
its AWESOME, my dock is wood and my icons too, its SICKKK