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Photoshop have done us proud by releasing a public beta version of Adobe Photoshop CS3 months in advance of it’s official release - go get it now and see what all the fuss is about!
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There are times when it is convenient to draw paths outside the actual image canvas, a good example of this is when you need a nice smooth curve that goes off the edge of your image - those curve handles can get very tricky to manipulate when they get very short!