3rd and final idea is essentially the same as idea 2 only the ideas will be blossoming from the the head of an illustrated me.

i think whichever idea i go for i'll favour illustrator over photoshop for the actual manipulation of the images i use, i can scan my artwork in and use live trace and live paint to apply nice flat colours to them and i dont have to worry about scale because illustrator works using vector (line) information so theres no loss of quality when you enlarge a piece.