Photoshop Eye Effects #1

A reader from the Photoshop 911 forums writes in to ask about blending two images into one -- writing:

I'm trying to create a nice graphic with these two images: (samples provided) and I want #2 to go over the eye to create a cool eye-design effect but I don't know what the heck to do. I already know how to erase the background from the #2 image and everything but when I paste it over top of the #1 image all I know to do is try and change the blending options which does not work, it just looks crappy. Can anyone provide me with some help? I want it to look really neat, like the #2 design is actually part of the eye!