Lost Video Island

[thefilmchick]

Vegas 7.0; Windows 7 64-bit.

I have two videos: One with person A, seated to the left. One with person B, seated to the right in another location. I tried to use cookie cutter on them to make them sit together. It looked horrendous.

I made an alpha channel in photoshop of Person B, seated on right. How do I use this alpha channel to composite the videos so that Person B is inserted into Person A's scene without a big ugly fade marker running down the middle? (I am OK with the fine-tuning thereafter; I just can't figure out a) whether the Photoshopped alpha channel needs to be saved in a specific format, b) where it needs to be saved, and c) how to get it into Vegas.

Thanks for any/all help!
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I saw a werewolf drinking a pina colada at Trader Vic's. His hair was perfect.