I want to have 2 distinct items blended smoothly - an ear and an ear extension.

http://farm3.static.flickr.com/2146/2349559048_706eec2e6f.jpg

I can have the transition smoothed by healing or cloning, but the colors of each item are slightly different. Does photoshop have any feature that can change an item's palette to match another?

Curves, hue/saturation, selective color, match color, replace color, channel mixer,
color blend mode, etc.

Yes. Many tools can do that.

Pick your poison.

Here's a 5min example.
(it took longer to save the pic, edit this post and
upload than to do the rough edit)