Making a decorative mirror is just a matter of using the terrain editor as a basis for the frame of the mirror. Simply create a grayscale image to use as the basis of a terrain with the resolution of 1024 x 1024 pixels. Then apply a wooden material to it.
Decide what kind of mood you want for your room before you make your image, notice the "bat-like" feel of the mirror frame to the right, this fits the mood for the room that I made.
If you use the gaussian blur in your image editor, you will get the appearance of beveled edges in your mirror frame.