This tutorial combines a few of my favorite techniques: blending an image onto a background convincingly, and creating depth in your graphic.
To demonstrate, we'll be going from this (hi-res) to this:
I am a big fan of cutting people out and sticking them on some random background, so the first thing you want to do is cut Jensen out. I decided the statue was interesting and could stay.
STEP 1: Open your image and make sure you're at 100% viewing. I usually expand my image so it fills up my entire workspace when I'm cutting people out. Select your Magnetic Lasso tool. (The magnetic lasso searches out contrast in the image and wraps around edges automatically. If it gets a little trigger happy, don't worry about it--just hit delete until you've erased as many points as you need. You can always click to manually add points and redirect the lasso.)
Once you've gone all the way around your image, you might need to adjust your edge. Go to the top of your workspace and click Refine Edge, and from there you can play with your settings. If you're shrinking him all the way down to fit on an icon, it doesn't matter that much, so I left mine at:
Radius: 1px
Contrast: 28%
Smooth: 3
Feather 1.8px
Contract/Expand: 0%
Once you've fixed your edge how you want it, go to Select-->Save Selection. Name it something cute like "The Bunny Hop." (<--I'm kidding, this is totally optional, though advisable)
Resize or crop your image down, then paste your selection into a 100x100px window. (If you've deselected at some point, go to Select-->Load Selection and choose The Bunny Hop from the drop down box. See? I told you it was advisable. You gonna listen from now on or what??)

STEP 2: Add your background behind Jensen. I chose a grunge background from the Green With Envy set by lizabeth0606.

The problem is, that looks like crap. He's basically just sitting on top of a random background and everybody knows it. So here is the first of my favorite techniques:
Blend your image into the background convincingly. The edges here are too blatant, the colors don't match, and the contrast is totally flat. Just because everybody knows he's not on his original background doesn't mean I have to rub their faces in it.
#1 Set Jensen to Multiply 100%.

#2 Copy this layer. Set it to Soft Light 100%.

#3 Go back between the Multiply and Soft Light layers and duplicate Jensen again. Set the middle layer to Screen to brighten him up. Reduce the opacity as needed. I set mine to 53%.

Your palette should look like this:

This melds your image into the background--just enough shows through to make it look like it actually belong there, and it softens the edges. Unless I'm doing a retro cut-out look, I always do this when I put a person on a random background texture.
STEP 3: Bring it all together. You want to add contrast and dark shapes to your graphic to make it all look like it belongs in the same picture.
I started by putting this lens flare texture (by cenedrawood) on Soft Light 100%. I had to rotate it around until it created shadows in the direction I wanted.
--> 
Now for my favorite technique. Create a new layer and make a black-to-white gradient, then set it to Exclusion 100%.
--> 
Hit Ctrl-Alt-Shift-E to copy and merge all layers into a new layer. Then go back to your gradient layer and set it to invisible (do this by clicking the eye icon next to the layer). Set your merged layer to Vivid Light 100%.
Your palette should look like this.

The reason we do this step is to add contrast, but in a particular direction. This creates distance between your foreground and background, giving the entire piece a more realistic look. Usually when people add contrast, they use soft light or an adjustment layer, but those darken up the image in a different way.
To give you an idea, look at these two images. This is an image duplicated and set to soft light. This is the same image using the Vivid Light technique I just explained. It keeps his face clear and visible, but creates depth throughout the image.
Okay, now the image has more going on with it, but he still looks a little awkward. Probably because it looks like he's sitting on air. Pick a texture that you can use to darken up the bottom left corner. I chose this light texture and inverted the colors (Ctrl-I). Then I went to my layer palette, and pasted it between the background and the Jensen base. Set this layer to Color Burn 100%. If you need to, feel free to add a layer mask and remove bits that cover too much of your base.
-->
--> 
STEP 4: Finishing touches. I wanted Jensen to be a little less pink, so I added a selective color adjustment layer on top of everything and upped my yellow by 100% on both Reds and Yellows. It only makes a small difference in this image, so you'll need to adjust this based on your image.
The last thing I did was add a tiny text layer. I used Times New Roman to type "deanwinchester," set the font size to 4px, and changed the tracking to 200 to separate the letters a bit.

And that's it! Finished icon, full of awesome. Your final layer palette should look like this.
To demonstrate, we'll be going from this (hi-res) to this:
I am a big fan of cutting people out and sticking them on some random background, so the first thing you want to do is cut Jensen out. I decided the statue was interesting and could stay.
STEP 1: Open your image and make sure you're at 100% viewing. I usually expand my image so it fills up my entire workspace when I'm cutting people out. Select your Magnetic Lasso tool. (The magnetic lasso searches out contrast in the image and wraps around edges automatically. If it gets a little trigger happy, don't worry about it--just hit delete until you've erased as many points as you need. You can always click to manually add points and redirect the lasso.)
Once you've gone all the way around your image, you might need to adjust your edge. Go to the top of your workspace and click Refine Edge, and from there you can play with your settings. If you're shrinking him all the way down to fit on an icon, it doesn't matter that much, so I left mine at:
Radius: 1px
Contrast: 28%
Smooth: 3
Feather 1.8px
Contract/Expand: 0%
Once you've fixed your edge how you want it, go to Select-->Save Selection. Name it something cute like "The Bunny Hop." (<--I'm kidding, this is totally optional, though advisable)
Resize or crop your image down, then paste your selection into a 100x100px window. (If you've deselected at some point, go to Select-->Load Selection and choose The Bunny Hop from the drop down box. See? I told you it was advisable. You gonna listen from now on or what??)

STEP 2: Add your background behind Jensen. I chose a grunge background from the Green With Envy set by lizabeth0606.

The problem is, that looks like crap. He's basically just sitting on top of a random background and everybody knows it. So here is the first of my favorite techniques:
Blend your image into the background convincingly. The edges here are too blatant, the colors don't match, and the contrast is totally flat. Just because everybody knows he's not on his original background doesn't mean I have to rub their faces in it.
#1 Set Jensen to Multiply 100%.

#2 Copy this layer. Set it to Soft Light 100%.

#3 Go back between the Multiply and Soft Light layers and duplicate Jensen again. Set the middle layer to Screen to brighten him up. Reduce the opacity as needed. I set mine to 53%.

Your palette should look like this:

This melds your image into the background--just enough shows through to make it look like it actually belong there, and it softens the edges. Unless I'm doing a retro cut-out look, I always do this when I put a person on a random background texture.
STEP 3: Bring it all together. You want to add contrast and dark shapes to your graphic to make it all look like it belongs in the same picture.
I started by putting this lens flare texture (by cenedrawood) on Soft Light 100%. I had to rotate it around until it created shadows in the direction I wanted.
--> 
Now for my favorite technique. Create a new layer and make a black-to-white gradient, then set it to Exclusion 100%.
--> 
Hit Ctrl-Alt-Shift-E to copy and merge all layers into a new layer. Then go back to your gradient layer and set it to invisible (do this by clicking the eye icon next to the layer). Set your merged layer to Vivid Light 100%.
Your palette should look like this.

The reason we do this step is to add contrast, but in a particular direction. This creates distance between your foreground and background, giving the entire piece a more realistic look. Usually when people add contrast, they use soft light or an adjustment layer, but those darken up the image in a different way.
To give you an idea, look at these two images. This is an image duplicated and set to soft light. This is the same image using the Vivid Light technique I just explained. It keeps his face clear and visible, but creates depth throughout the image.
Okay, now the image has more going on with it, but he still looks a little awkward. Probably because it looks like he's sitting on air. Pick a texture that you can use to darken up the bottom left corner. I chose this light texture and inverted the colors (Ctrl-I). Then I went to my layer palette, and pasted it between the background and the Jensen base. Set this layer to Color Burn 100%. If you need to, feel free to add a layer mask and remove bits that cover too much of your base.
-->
--> 
STEP 4: Finishing touches. I wanted Jensen to be a little less pink, so I added a selective color adjustment layer on top of everything and upped my yellow by 100% on both Reds and Yellows. It only makes a small difference in this image, so you'll need to adjust this based on your image.
The last thing I did was add a tiny text layer. I used Times New Roman to type "deanwinchester," set the font size to 4px, and changed the tracking to 200 to separate the letters a bit.
And that's it! Finished icon, full of awesome. Your final layer palette should look like this.
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