Unbeknownst to him, Paulie had kept the painting and had it altered, changing Tony's clothes to those of a colonial general. When Tony demands to know why he had him painted as a "lawn jockey," Paulie says that he did it out of sincere admiration for Tony as a leader.
This event occurred without Paulie's knowledge, and he had kept the painting and made changes to it, transforming Tony into a colonial general by altering his clothing. When Tony asks why he was depicted as a "lawn jockey," Paulie responds that he did so because he holds Tony in high regard as a leader.