Here's a tutorial I made about displacement mapping in Photoshop. This is based on a t-shirt, but it could be done with scaled creatures, patterns, reflections in water, etc. The possibilities are endless. Anyway, let's get started. Here's the shirt image I'll be using.
The first step would be to paste in the pattern, logo, texture, or whatever you want displaced to the file and keep it in it's own layer.
After you've done that, make a duplicate file of the exact same dimensions and shade it with a soft airbrush like it's being lit by a head on flash bulb. Make sure any dead area is filled with 50% Black. Save the file as a greyscale .PSD
Back on your original file with the layer you plan to displace activated, choose "Displace" from the "Distort" menu under "Filter". Now you need to make an approximate guess of the angle your object is facing so Photoshop knows which direction to distort your image. Here is an example of how Photoshop's grid system works:
After you click ok, Photoshop will ask which file you want to displace from. Choose the Grayscale .PSD you just saved and click ok.
Now your layer should be displaced.
The next step is to render it with proper lighting in a separate layer. Here's the finished product.