You guys are having fun with this one! Hope you dont mind my take.
First thing I did was to use the clone tool to get rid of the writing on the horse and then to paste a new background on as a new layer. Next I used Image Skil in PSP to remove the background around the horse and then used the ereaser tool to clean up the edges. Merged abd duplicate. Used Topaz Labs to destaurate and add detail to the horse. Added the wings on a new layer and destaurated and lightened up to match the horse. The clone tool worked great for blending the feathers into the body. Next I added a drop shadow on a new layer and then erased where I didnt want the shadow to be.
merged all layers. duplicate again and used the clarify tool to add still more detail. Next I added 2 texture layers and placed the blend mode on overlay. Played with opacity levels until I found what I liked. Last was the warp tool set to expand to make his nostrils bigger and the tail longer
