Create the transparent layer. In Adobe Photoshop, bring up the image for which you will be creating effects. Make the background layer transparent by double clicking background in the Layers palette and selecting the appropriate option. A new layer titled "Layer 0" appears. In Fireworks, set the canvas to transparent in the Property Inspector. When areas of the image are removed in the upcoming steps, a transparent background will be revealed.
Adjust the midtones out of the image using the Brightness/Contrast command. In Photoshop, this is under Image > Adjustments. In Fireworks, make sure the image is selected (a blue border appears around it) and go to Filters > Adjust Color > Brightness/Contrast. In Fireworks, for example, take the brightness to around 35 and the contrast to 80. Make sure the Preview box is selected so you can see the effect your adjustment has on the image before clicking OK.
Convert the image to grayscale. Even if you are using a sepia-toned image, you will need to convert it to black and white to achieve the desired effect. In Photoshop, make changes by going to Image > Adjust > Threshold. In Fireworks, select the image and go to Commands > Creative > Convert to Grayscale.
Use the magic wand tool to select the white areas. Set the tolerance level somewhere between 20 and 40, depending on the effect you are trying to achieve. With the tool selected, click in a white area; then choose Edit > Cut to remove the portion within the selection outline. Or, use the keyboard command Control + X or backspace on a PC or Command + X or delete on a Mac.
Add more decoration, effects and graphics. This can include other images brought in as a composite to your current image; simply apply the process from Steps 1 through 4 to the imported images and resize the canvas to fit if necessary. In Photoshop, use brushes across the image to add distortion and a ragged or distressed appearance; set the color to white and adjust the opacity as desired. In Fireworks, select the line tool, and in the Property Inspector, choose white as the color and select an effect from the Oil, Random or Unnatural stroke categories. Draw several lines across the image and try varying the stroke size and transparency for each one to create a more realistic effect.
When you are satisfied with the final image, it may be helpful to group the selections by choosing the Select All command and grouping the objects (Modify > Group or Control + G in Fireworks). Resize the image and export as necessary. You may choose to save the image as a brush in Photoshop (go to Edit > Define Brush) or as a pattern in Fireworks by saving the image in the Patterns folder under Program Files > Adobe (or Macromedia if you are using an older version of Fireworks).