Please read first before assuming this is a really simple question.
I saw my instructor do it at college and I did it once or twice myself, although it may have been CS2 and not CS3. It ihad something to do with dragging a layer into the thin slit between layers, above the layer you wished to add it to.
If successful, it wouldn't shuffle the layer order, instead you would now have one image shown through the other on the same layer, which means it may have meant my instructor made a selection first, but still, I can't figure out how to do that drag technique of adding one layer inside another like that and it likely involved holding down a key too for all I know. I don't believe a layer mask was involved either from what I remember and I can't remember if the added image was even editable after that.
This may all have something to do with the "paste into" feature as well, but I'd like to learn the above mentioned trick in case it is different.
Thanks for your time, I understand there's other ways of achieving this effect but this would be faster than all of them if I could just figure out how that was done again.