Morphing is a special effect that transits one image to another seamlessly. Morphing software involves fading as well as distortion. Corresponding key points need to be selected in both images, so the program can exactly calculate how to change one image to the other.
The first very good morphing program was developed by Thaddeus Beier and Shawn Neely (Pacific Data Images) in the early 1990s. They used this "feature-based morphing" first in videos such as "Black and White" by Michael Jackson.
Nowadays, there are various small morphing software packages available to buy and to download. I am currently experimenting with an application called Morpheus Photo Merger. It is very easy to use, but the quality may not be sufficient for the final.
Example: