You can now apply nondestructive, editable filters inside of Photoshop CS3 using smart objects! Nondestructive Smart Filters allow you to visualize changes without altering original pixel data.
The first thing we want to do is convert the image into a smart object.
You can do this a couple of different ways. One is by going to Layer>Smart Objects>Convert to Smart Object. You can also do it by selecting Convert for Smart Filters at the top of the Filter menu.
I want to sharpen this image a little bit, so I am going to go to Filter>Sharpen>Smart Sharpen. After selecting this, Photoshop will apply a pass of the Smart Sharpen Filter. The default settings seem to give it enough pop for me so I will leave them as is. The only thing I will change is the Remove value to Lens Blur from Gaussian Blur in order to apply a very precise sharpening effect and click OK to accept the results.

Now, I am going to duplicate this layer (Cmd+J) and turn off the top layer. I also want to remove the effect and rasterize the layer I'm working with. By doing this I will not be able to edit the filter I just applied to it, but that is what I want I this case. Do not raterize the layer unless you're sure you will not want to edit it later.

Be sure to notice what's going on in the layers palette. There is the image itself, the followed by an inset item that says Smart Filters, and everything below that is an editable smart filter. If you decide that you sharpened the image too much, all you have to do is double-click on Smart Sharpen and you can readjust your settings!

I want to apply another filter to it to give it a slightly different aesthetic appeal, so I am going to go to Filter>Texture>Mosiac Tiles.

Now the tiles are covering the lady's face, which is not really what I want. I want the effect that I just applied to be only in the background. Using the QuickSelection Tool (W), I can quickly paint over the lady's face and separate her from the rest of the image. After her head is selected, by going to Select>Inverse (Cmd+Shift+I), I can select everything other than her head and delete it.

Cut the top layer back on and the effect that I'm going for is achieved. It looks like it's a little dark in the background so I am going to apply an adjustment layer to it to brighten it up some.
Looks good - Now, if I decide that I don't like the mosaic tiles settings, we can just click on it again and edit some more. The great thing is that they are editable and non destructive so you can play around as much as you want without fear of messing up your image.

And Wa-la!
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