I didn't know that painting shadows was a crime!  In my book, it's the final image that counts and any method you use to achieve it is fair game.

I had an aditional thought on morphs - because you apply the output model as a morph target, there is nothing to stop you using multiple morph targets. Say for example you have two pictures of the person you want to model. You can have morph targets as follows:
Picture 1 original
Picture 1 mirrored (using the mirror function in FSP after saving the original mesh)
Picture 2 original
Picture 2 mirrored.

...and then apply morph percentages for each of these to achieve your desired final figure. Just a thought.

I cheated with the shadow catching on this - it is just added by hand in Photoshop...but glad that you think it looks OK!

What you get out of FS3.5 is a revised version of the head model that you started with. You can import virtually any head - V2, V3, V4, Aiko, SP3, M3 etc, use FS3.5 to generate a morphed head and then save that. You can then in Poser use this new head as a morph target, you are generally recommended to apply this at perhaps 70% rather than the full 100% to avoid ripping the mesh, but you also have all other regular morphs available as well, so you can further tweak and modify the head to your heart's content!  The combination of texture and morph gives a good basis for a likeness, but as we have said here before, the more work you are prepared to put into it, the better this is likely to be!

If your FSP texture has been generated from a face-on picture, the sides will look poor (as the app has little or no data to work on) so if you blend the main face parts into a standard texture and match the basic skin colour then this improves the look and usability of the texture. And as you say, you can use the original photo to refine parts like lips and eyebrows.

I've yet to have more than a cursory play with the P7 morphing tool, but that looks to have a lot of potential with some work and patience, and as you say could be used to refine an FSP head as a starting point.  zbrush takes you into a whole new league, but at a significant price cost!

I have this time attached a head that I did to see if I could push FSP to extremes - it coped pretty well!

I have to agree with operaguy - to make a REALLY convincing celeb look-alike, you would need to out in more work than just using FSP (although I believe it would be a good start!). But as a way to generate a range of interesting faces that no-one else is using, it is a great tool.  In case there is any confusion, FSP generates the morphs AND the texture from a single photo. I usually edit the texture to tidy it up, but again, it is a great starting point.

On 3.5, it is a step forward but perhaps not the leap that some would be looking for. I have had mixed results from the "refine" feature which for me was the big potential improvement area, but some of the workflow updates are welcome.

All in all a useful utility - and considering what you can pay for just one character, when FSP gives you potentially unlimited characters of your own choosing, not half bad value too!

I attach a picture of a V4 face that started life as a picture of Uma Thurman...

I have FaceShop Pro and like it!  It's not perfect and does need attention to details like placing points - and the better picture you start with, the better the result (GIGO!) and yes, I agree that the texture map benefits from some editing after being output, but this is a lot easier than starting a texture from scratch!  Approach it as a unique tool that is easy to use and can produce some useful output and you can have a lot of fun with it!  Here are some example of what I have done with it:
http://www.renderosity.com/mod/gallery/index.php?image_id=1496200
http://www.renderosity.com/mod/gallery/index.php?image_id=1494058
http://www.renderosity.com/mod/gallery/index.php?image_id=1496712

I would not have produced these pictures without FSP.

I have checked Renderosity, Content Paradise, Daz...nothing seems to quite fit the bill. Maybe I'll just have to compromise, or make my own. The latter could take a while though with my modelling skills!