- Now, to soften the edge, we simply duplicate our shape layer, place the copy below and Gaussian Blur it by, say, 2. Since it now blocks the Difference effect, reselect the original shape and clear it from the blurred version. This will let the effect through and leave only the soft edge OUTSIDE the original shape, easily available for tweaking.

- Finally, the pixelated aspect can be created using the Diffuse layer mode. Duplicate our smooth edge and set it on Diffuse. You will notice that's waaay too pixelly, and that changing the layer's opacity doesn't fade them away, but rather decreases their widespread. How do you get them under control?

Unfortunately, if you Cltr-click the diffused layer, you select the original data, which is only presented diffused but is, in fact, intact. So, we can use the Select Color Range method to pick these pixels. First, make them easily selectable with Ctrl-U. Now simply Feather (Ctrl-Alt-D) by like .3 and Copy-Merged (Ctrl-Shift-C) into a new layer. This way you're left with them not-so-pixelly-anymore pixels at your disposal. Tweak away!

All three effects combined:

With both G. Blur and diffused-pixel effects added to the corroded edges, we successfully blend it into the image. Generally, the more factors we use to bring elements together - the better, but 3 is enough. Now all that is left is to make the graffiti more unique, and not just a simple color overlay.

I had no idea...

Writing in retroscpect, I had no idea this will turn out the way this is going to. Just luck... or whatever you call it.

In doing the above, I accidentally set one of the original grffitti duplicates on Difference. Vs. the original underneath, it created a very interesting effect. It just needed its color tweaked.

Color-tweak it like it's hot

The second image on the right shows the accidental result: it brings out the shapes and colors, but it's too extreme. Playing with the opacity doesn't dim in down, but alters the color effect (Difference mode has unnatural results).

So, we need a different way to reduce the color effect and bring it closer to the rest of the image. Solution: copy the portion from the original image of where the graffiti went to and place it on the top, Normal mode, 50% opacity. Result: colors normalized, and as a side effect, the pixel density smoothed out a bit.

Now it looks more natural, but the contrast of the colors is a little weak, in terms of saturation. Let's pop it with minimal value/hue change: Copy-Merged (Ctrl-Shift-C) our shape and place it above the others on Soft Light. Experiment with the colors and stuff (Ctrl-U) to achieve desierd effect, seperating the two colors using the Color Channel menu.

For extra points Invert (Ctrl-I) it for an even stranger effect.

"What doesn't kill your image only makes it... stranger".