Merging Images

I am looking for a way to merge image A with image B such that pixels in image A that are a certain color are replaced with pixels from in image B in a fashion similar to the blue screen effect that is used to surround an actor with a background that really isn't there. This would be like creating a window in one image such that when the image is "laid" over another image, what is underneath shows thru in the resulting image. I believe there is a transparent color you can specify for gif images, but I need something that works with a larger color pallet, like JPG. Any hints on how to place an image inside a picture frame with an irregular shape in another image would be great. thanks, Warren Vail