Tap and hold the wallpaper you want to use until a pop-up menu appears, choose Save Image and it will automatically save to your "Photos" app. Go back to the initial (main) app screen of your iPad and choose "Photos" icon.
Choose the wallpaper image you just saved, then tap the button (a square with an arrow in it - top right button on iPad) and select Use As Wallpaper.
Then tap the button Set Wallpaper (on the iPad you can set the wallpaper for lock screen, home screen or both).
About iPad wallpaper 1024 x 1024 pixels:
Apple iPad (and iPad 2) has a screen resolution of 1024x768 pixels in landscape mode and 768x1024 pixels in portrait mode, respectively.
When you rotate iPad, the wallpaper automatically adjusts to best fit the screen. This means the best wallpaper will be 1024x1024 to accommodate both portrait and landscape modes.