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How about finding some ratty, old, dirty, stained, ripped, peices-missing type of photo and having people do a restoration/colorisation project with it.
(Since most Photoshop "contests" on most sites seem to deal with fantasy, make-a-bug-look-like-a-Transformer or put-George-Bush's-face-on-Madonna's-body -type manipulations, something like this might help people learn some of the more "real-world" applications of this...uhh...application).
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