There are a bunch of ways you could do this in Fireworks, but I think the
easiest and most flexible would be to use a vector ellipse, with a feathered
edge, as a mask on the bitmap.

1) Open the JPG in Fireworks
2) Use the Ellipse tool to draw an ellipse inside your image. Keep ellipse
small enough so that the edge of the ellipse is far enough away from the edge
of the image for the feathering.
3) In the properties panel, make sure the ellipse is white
4) In the properties panel, look for the "Edge" dropdown and change it to
"Feather"
5) You can set the Feather amount.
6) Select both objects (the original bitmap image, and the vector ellipse) and
choose Modify > Mask > Group as Mask

At this point you should have a nice feathered, elliptical mask to your
original image. You can change the background color to match your website
background color (select nothing, then look in the Properties panel to choose
background color).

If you find that the ellipse is not quite the right size, position, or
feather, you can continue to edit it. Look in the Layers panel, and click on
the mask thumbnail (it will be the thumbnail on the right of the two thumbnails
which appear "linked" together). Once selected, you can change the feather. If
you want to move or scale the ellipse without moving/scaling the image, you
must "unlink" the mask -- simply click that little chain link icon between the
mask thumbnail and the image thumbnail in the layers panel. Once unlinked, you
can click on the mask thumbnail and move/scale without moving/scaling the image.

Hope that does the trick!