Open your image: Deception Pass in Washington State. Create and position your type.

Make sure your type style is set to Smooth on the Menubar.



Control + Click on the type layer to load the selection.

Click once on the background layer, Edit > Copy and then click once on the type layer and choose Edit > Paste Into. The type will have almost completely disappeared. Not to worry--we'll retrieve it shortly.

Delete the background layer and the image now shows up in the type. It depends on what font is used, however, it makes a better overall image to use the magic wand tool, select the area around the image and utilize the Gaussian Blur Filter, setting of 3 and smooth out the rough outer type edges.
Note: you can also lower the opacity and/or the fill to 0% and the background layer will be transparent, albeit still present. This will work only if you click once on the background layer to make it active.

Resize the image slightly. In the layers palette, choose drop shadow with 90% opacity and then from the popup menu, flatten the image.

Another example...from the Bow River in Colorado.