I contacted John Pasche who designed the LP album cover (pictured below) on how it all came together ...
Dear Shawn,
Thank you for your interest in the Rocky Horror Picture Show sleeve. It began as a commission for the original film poster and the sleeve was for the soundtrack released at the same time. As far as I remember, the brief was to make the film design different from the stage version graphics as not to be confusing. I think I had a fairly open brief (artistic freedom) except for the fact that I needed to show stills from the film. I was doing some airbrush illustration at the time, hence the treatment of the three principal characters on the front. I remember that it was a bit of a flop when it was first released and took quite a while before it resurfaced as a cult film where it has remained ever since. I think I probably have the artwork stashed away somewhere, but haven’t seen it for a while. Hope this is of some assistance.
Regards,
John Pasche