Hey, that's the old VE-1 wallpaper I made. I totally forgot about that. Think I spent....2-4hrs on that one. (hey I love tweaking minute details.)
Okay
1) You need a very good picture of the toy (eliminate as much shadow as you can using diffused lighting or bounce as much light into shadowed areas as possible so you can see max. details)
2) Choose the background that you want.
3) Photoshop
4) extraction can be done a few ways. The most common two are: lasso tool(draw an outline around the object) or PS-> filter>extract
No idea if JASC's PSP can do this since I've never used it.
5) Layers are your friend. Make a layer for each object you want to manipulate. (ie layer for canopy, right wing, left wing, brakes,...etc.)
6) Now figure out lighting. Make layers for each lighting effect.
7) Make sure all your changes blend seemlessly into the scene otherwise you won't be getting a "painted" effect.