Is there a way to set it up to allow changing the color of the circle (say, from white to black, or blue, or red) and keep smooth edges of the text (and circle) blending with the background (i.e. So if a circle is white and I place the image on a blue background, the word "TEST" would be in blue (so would be the area around the circle). I just need a circle with text cut out and showing around the circle and through the word "TEST". Say, I need to have a 300x300 pixel image that (forget about photos) consists of a solid-color circle (circle can be white, black, red, blue, or any solid color, or gradient, does not matter) on a transparent background, and inside of this circle I'd like to cut out a word (say, the word "TEST" with no bevels or other decoration, just flat font) all the way to the transparent background. Let me clarify a bit what I'm trying to do to see if there is an even better option. 99jon's walktrhough is helpful, but I was hoping to find a workaround that would allow keeping transparent text that goes all the way through all other layers to transparent background as a text level, but once I flatten the image, I'd lose the text layer, so I cannot make any changes to it (like slightly change the font, size, style, face, etc). Thank you all for the suggestions, especially 99jon.
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