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when cutting things out to make teh image translucent, don't over-think it; just select all the areas you want gone, Clear THEN add a transparent layer, Clear everything again and BAM! you have your image. I then open a new box with appropriate dimensions, ad a background and copy the edited one into it, reposition, anchor and then maybe a little light blurring on teh edges to blend everything together and save that image as a finished piece.
In the end I get something like my enclosed image
