Originally Posted by Phanx
Yeah, that's even what Blizzard does, for example, in the talent frame. The circular border hides the built-in border on the icon texture.
Your other option would be to actually make circular versions of every spell icon -- see the Cold Icons packages for instructions on how to batch-process them in Photoshop -- but that seems like a lot of effort, not to mention a rather huge download package, for a simple cast bar.
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There's also the additional caveat that SetPortraitToTexture requires the image to be BLP format. I almost lost my mind one evening over that little tidbit.
EDIT: This is what I get for skimming - you specified
circular, which makes my above text pointless.