Blending Photos (and Coloring)

1) Open your 2 photos that you would like to blend. The 2 photos I am using are below.

 

2) Select one of your images. Go to Image - Resize - Canvas Size and set your settings to mine. 

 

3) Go to the other image, do a Ctrl + A, Ctrl + C, and go back to the image in which we enlarged the canvas and do a Ctrl + V.
4) Now place the image your just pasted, slightly on top of the other one and now you can crop it if you need to.  

 

 5) Select the eraser tool (E) and click on a soft brush. 

 

6) Making sure the pasted layer is selected, erase the edges.  

 

7) You are done with your blend! You can either stop here, or keep going.
8) Go to Layer - New Fill Layer - Gradient. I am using the settings below.  

 

9) Set the blend mode of the gradient fill layer to color. You can see how mine turned out below.  

 

I have also added the .PSD file for your reference.  

.PSD file