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You can dramatically change the appearance of an image using Photoshop's Filters. Filters can be easily applied to an entire image, a layer, or a selection by using Photoshop CS3's Filter Gallery. Information is given below on how to apply a filter as well as how to open up the Filter Gallery.
To apply a filter effect:
From the Filter menu, select the desired category » desired effect
EXAMPLE: From the Filter menu, select Artistic » Colored Pencil
The Filter Gallery appears with options specific to the chosen filter displayed.
At the right side of the window, use the filter specific options to customize your effect
Click OK
The Filter Gallery included with Photoshop CS3 allows you to easily browse, experiment with, customize, and apply filters. A dynamic preview of the selected area of your image is provided in the Gallery window so that you can see how the filter will affect your image before applying it.
Select the area on your image which you want to apply a filter to
From the Filter menu select Filter Gallery...
The Filter Gallery opens.
To see the effects within a category of filters, in the Gallery list, click the category
Select the desired effect
NOTES:
Options specific to that filter appear at the right side of the window.
In the picture below, the Artistic category is open and Watercolor has been chosen.

Adjust the filter settings as desired
NOTE: Watch the preview window as you alter the filter settings; the preview is dynamic and will update each time you change a setting.
When you are finished, click OK
Your filter is applied to the selection.
EXAMPLE: Below is a before and after shot of a flower with the Watercolor filter applied:
