"So how do I get the alpha channel visible so that I can edit 
it?" you ask.

It sounds like you want a layer mask.  Try this:

1. Make sure your small layer is active.
2. In the Layers & Channels window, select "Add Layer Mask"
    You will see a new thumbnail appear next to the thumbnail 
for your
    small layer.
3.  Click on this small thumbnail.  That selects the layer mask 
as the
   active image, even though you won't see any other change.
4.  Try various gradient fills in this layer mask.  You will be 
    to see the effects if you hava another layer visible below 
    layer with the layer mask.

Hope this helps


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