This began as an experiment with the Free Transform tool's ability to scale down images in specific proportions. Once I had the different sizes of the statue, I began to think of other sorts of progressions -- in this case a transformation from boy to elf. As I made the boy progressively smaller, I used the Liquify filter to elongate the nose and ear, then applied successively larger amounts of the cutout filter and applied a gradient to color it. The bench and grass were built in Elements, the background is a stock photo. I applied the cutout filter to duplicates of both and then added a layer mask with a gradient to give a gradual shift from 'real' to cutout.