1. Your modification may not completely obscure or destroy any previous modification- though you can modify a previous modification. (I.E. if I pasted a dog in the image, you could paste Justin Bieber's head onto the dog's, but if you posted an image of an elephant over the dog I'd be quite upset)
2. Once the image gets too cluttered, we shop the whole thing into a new image, preferably a high-rez one so we have room to work, and keep going from there.
3. No JPGs, or any other lossy image format. PNG FTW.
4. When you begin working on your shop, post a placeholder indicating that you are doing so. We do this because shopping takes time, and if someone else starts shopping while you're working on yours, large messes can and will ensue.
Anyway, original image:
And, first edit:
Anyone can join in, just download the image, open up Photoshoop/GIMP/MS Paint/Mario Paint and mess with it, then upload the results.