The docs suggest various ways, of which the simplest is probably to make your string into a thing that looks like a file:
from PIL import Image
from StringIO import StringIO
LargeData = urllib2.urlopen(PosterURL).read()
# read data from string
LargePoster = Image.open(StringIO(LargeData))
# After editing the image, turn it back into a string
# for saving in the database:
result = StringIO()
format = 'JPEG' # or whatever you want
SmallPoster.save(result, format)
SmallPosterString = result.getvalue()