1. I'm starting with 2 pictures I got from sxc.hu. Make sure your pictures are similar. Mine are called "The Falls" and "Below the Falls" (very convenient) . The landscape is also more or less the same. These factors make them great for blending!
2. Okay, so we have 2 separate images, but to blend them we somehow have to get both pictures to one image file. I know that both images are vaguely around 500 * 500 pixels. So I am going to create a new file that is 1000 * 500 pixels. Its ok if its not exact and even better if the new, blank, canvas is smaller than both pictures, so it will be better for blending.
3. Copy both picture (Ctrl + C) and Paste them as a new Layer (Ctrl +L) on the new canvas. Now use the move tool (M) to move the pictures so one is slightly overlapping the other.

4. Steps 1-3 are the base steps for blending. Now its Blending Time!!! Right now you should have 3 layers.
a) the blank canvas (delete it)
b) the layer that is under the other layer (name: 'overlapped')
c) the layer that is overlapping the other layer (name: 'overlapping')
METHOD: SELECTION TOOL
5. Click on the top layer 'overlapping' and select the rectangle selection tool. (S)6. Set the Feather to 80.
7. Select the part where the pictures overlap.

8. the Selection will expand because it is feathered, but do not pay any attention to that. Instead press the DELETE button once or twice on your keyboard. If you don't feel its blended enough you can keep pressing, but keep in mind the more you press delete the more transparent the image becomes. If you think you've pressed it too much press (Crtl +Z) on your keyboard to undo. Congratulations you have blended a picture! Be sure to crop (R) your picture if you need to. Also don't forget to merge the layers!