You can switch from the hand tool to the move tool to resize and reposition the background image but I think thats the extent of whats currently possible related to what you want to do
You would also need to be able to
- Move the photo layer to anywhere within the layer stack
- Have the photo support transparency. I saved a PNG with a transparent background from PS Touch to Camera Roll and imported it but the transparency was lost
I was going to suggest PS Touch until I got to the part in your post that you already had and were working with PS Touch.
I created the following idea thread requesting the fucntionality
I created a single thread because both would be required