Example XUL overlay file:
<?xml version="1.0"?>
<?xml-stylesheet href="chrome://demo/skin/overlay.css" type="text/css" ?>
<overlay id="messengerWindow" xmlns="http://www.mozilla.org/keymaster/gatekeeper/there.is.only.xul">
<script type="application/x-javascript" src="overlay.js" />
<toolbarpalette id="MailToolbarPalette">
<toolbarbutton id="demo-button"
class="demo-button toolbarbutton-1"
label="Demo"
type="button"
oncommand="Demo.load();"
/>
</toolbarpalette>
</overlay>
Add this to the css file you referenced in your xul file:
#demo-button, [place="palette"] > #demo-button {
list-style-image: url("chrome://demo/skin/icon.png") !important;
}