Oh dear, I’m sorry. A bit of a dull mind early in the morning.
You mean, you want to superimpose an image over the top of another, or over the top of part of another?
Well, the answer’s the same. iPhoto 5’s basic editing tools are useful for a range of image corrections, and with a bit of imagination a few effects as well, but it does not have any compositing tools.
Again, you need an external editor to do that for you. Round-trip edit the image(s) and there you go. Where two images from iPhoto are required for compositing, things get a bit tricky. It can be done easily with Photoshop, which, with both iPhoto images opened in Photoshop, will allow you to simply drag one of the images into a new layer of the other image with the Move tool (keyboard shortcut: “v”).
Other editors, especially freeware titles, may not be so versatile. In this case you may need to get the images out of iPhoto (export them to the desktop), manipulate your image with your chosen editor, save the composited image to the desktop (or wherever) and then import that image to iPhoto alongside the originals.
One caveat: I just tried running this set-up (so I knew it could be done) using Drawit Lite freeware and iPhoto 8 got messed up severely, requiring a prefs trash to get it working normal again. Careful with Drawit Lite. I’ve set my external editor back to Photoshop CS3. Whew.