I just read something about cut-out, never do that unless you have no other way of blendnig it in, try masking for a change, its very helpfull, very pretty and takes less time.
(PS tut on how to do it)
when you have a layer you want to cut out selected, press the button with a circle in a square, on the layer menu, its on the bottom somewhere. then you can draw with your brush over the layer, and that part where you draw will disappear. very neat trick (if that doesnt work, switch the default colors around so black foreground becomes white, and vice versa.)
I typed really fast, so if you have no idea what i'm saying PM me, and i'll explain more.