looks good so far but i think you should leave the blending for last. painting a picture is a bit different from skinning..... you want to lay down all the colors using a hard edge brush with different opacties. first you start with base colors like you did in the first picture, then cell shade,. then you take a 50% brush and take a middle value color to better "blend" it in. then take a 25% brush to color between those values and it'll seem to gradate into a blend. then take 7% and go between those values again... photoshop is not very good for blending, so using opacity brushes is your best friend. plus, this way looks better and takes less time than using the blending brush in photoshop.