You can use blend modes in Photoshop (incl. the version you have).
To make this work the background of the image needs to be black.
- Import the two images in two different layers.
- Select the top layer and choose Multiply as blend mode
This will make the picture looks like it is printed on the paper with jagged edges.
If you don't have a black background for the jagged image and you only want to use the shape:
CTRL + click the layer with jagged edges. This require the background to be transparent (I don't remember if this click operation works in PS from 2003).
Now switch to the layer with the image which you want to apply the edges to. You can do this now by inverting the selection (CTRL + I) and then cut. This operation is permanent.
If PS/2003 support layer masks you can instead of cutting, :
- Click the mask icon at the bottom of the layer dock to apply the mask to the image. You will then be able to adjust it later if you need to.
A final option is to trace the jagged image with the lasso tool, then switch layer to the image and do as above. You also have the option of do selection based on color. If you had supplied images for example it would be easier to suggest the "correct" approach, but this should get you going.