The use of an existing image, or rather a portion thereof, in a new piece is covered under the copyright act. Of the original photo, there remains the faint outline (roughly <5% of the piece), and even that has been modified so that the new outline doesn't match the old. This is well within the 'acceptable use' mandate of the copyright act.
I'm well into a discussion with their legal beagles re: how closely I followed the act. They're reviewing it...for the second time. We'll see if I'm allowed to place my finished work with their site.
In the meanwhile, parody pieces (like the one that I sold) are acceptable through the 'fair use' portion of the act.
Maybe i should've made fun of Bob Marley instead.