The anti-war protest in San Francisco picture has been going around via e-mail as well as one of Cindy Sheehan kneeling with a bank of photographers surrounding her. Photographs have been manipulated since the first dark room - a picture is no longer worth a thousand words - if it can be manipulated it may be worth a thousand bucks. Ansel Adams was famous for his dramatic black and white photographs, some of which I dare say were manipulated in his dark room for greater effect.
I'm sure you'll agree that it's one thing if you manipulate a photograph for artistic purposes, and quite another if you manipulate it for journalistic purposes.