I've come up with this, but it still looks like a layer just placed on top.

http://www.singaporeanimenews.net/gm.jpg

How can I make this more convincing? So far I've tried dodging the edges but it doesn't really help.

select the top layer then change the selection to "border" depending on the size of image, if image is small use a border of about 2px, if larger then use a border of a 5-10px
then use "Gaussian Blur" about 2-5px (your just blurring the edges)

I think there would be more shadowing inside the eye area, and along the underside on the neck.

The lighting of the mask is too flat. Change it.
Many ways, but I used two curves, one up and one down to change the incidence of light (and painting into the layermask).

the mask looks way too small and its way too smooth looking, no texture to it like the rest of the photo.

also the angle of the mask just looks off, it makes her look like she is all forehead.

Thanks for the help.
Here's my latest version.

http://www.singaporeanimenews.net/gm2.jpg
http://www.singaporeanimenews.net/gm2.jpg"]http://www.singaporeanimenews.net/gm2.jpg

What I did was

1. blur the edges of the mask slightly to antialias it
2. add shadows below the chin and around the eyes
3. adjust the mask contrast with a curves layer
4. distort the mask with distort and perspective transforms to make it slightly taper towards the chin area

I think it looks a lot better than what I started with, but still doesn't seem quite right.