Can I make a collage out of magazine pictures and sell it or is this illegal?

If the pictures you are using are of a celebrity - you are OK. If it is of a trademarked item like Pokemon - you cannot advertise it as being a genuine Pokemon item - even if that is all there are on the item, but the pictures are legal to use as an art medium without infringement if no one picture is the entire basis for an item being sold. It is legal to sell old magazines so it is legal to use the contents as the imagery on an art project - you are making it uniquely yours.