Without having Elements, I'm unable to experiment with the Text Warp function. If Warp works on a rasterized (simplified) layer, you could be in business for easily creating the background that coincides with letter height.
Try this in Elements:
1. Create a text layer and type some text (whatever you like).
2. Layer > Simplify Layer
At this point is the Text Warp tool still available (not grayed out) after the layer has been simplified? If you can warp the text after the layer has been simplified, let me know.
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There are multiple ways to get the text layer from Elements to
PS. One of these will work.
A. Via file
1. File > Save As... (and choose Photoshop format .psd)
2. Open the file in Photoshop. Your text layer should be intact.
B. Copy/Paste
Before you can copy the text from Elements it first must be "rasterized."
1. To rasterize the Elements text, Layer > Simplify Layer
2. While holding down the Ctrl key, click on the Elements text layer.
3. Edit > Copy
4. Switch to
PS window.
5. Open a new file, if not already open
6. Edit > Paste
C. Drag and drop (this might work...).
1. Photoshop and Elements are open, windows side by side. New file created and open in Photoshop.
2. In the Elements Layers Palette, click on the text layer and drag it into the Photoshop window.
Sorry this is such a long hike...
~Danny~