As far as strict halacha[1] is concerned, we are not aware of a specific ruling that would forbid the type of photoshopped pictures you describe. On the other hand, we must understand what halacha is. The Torah legislates commandments based on values and presents their parameters in a cryptic, coded form. The Rabbis through the ages have deciphered the texts and built on the values and the commandments, turning them into thousands of binding regulations. These formal regulations have a life of their own, semi-independent from the original value, as we apply halachic principles to arrive at rulings for a myriad of real-life cases. Certain cases, especially modern applications that the Rabbis could not have addressed directly or that lend themselves to subjective factors, may not violate a specific regulation even if they compromise a certain value. While treatment of such cases has some flexibility, it is inaccurate to say that Judaism has no objection to them. Rather, the pros and cons of the situation need to be weighed, and the matter might be viewed differently by different beholders and in different contexts. Your case is an excellent example.
Whether you ascribe the Divinely related nature of humanity to the body or just the soul (a broad topic in itself), the dignity of the human body is an unquestionably serious Torah value with far-reaching halachic applications. There are times when one can or must compromise certain laws in order to protect a human body, living or dead, from disgrace.[2] The body is the Divinely ordained home of the pure soul He granted us, and it represents the person. Disgracing the body disgraces the person as a whole.
You will surely agree that it would be reprehensible to display such photoshopped pictures of a deceased person at his funeral, and your relative would presumably not object to using such pictures in the frivolity of a Purim party. Context is crucial. A wedding album is a borderline case. On one hand, things related to a wedding have a formal side. On the other hand, it has long been accepted and even encouraged at Jewish weddings for people to do outlandish things to increase the sense of excitement.[3] It is most appropriate to consider the tastes of the bride and groom (without creating a family squabble).
Regarding your relative’s involvement in his children’s affair, there is limited precedent for his right to raise a moral protest. The gemara[4] discusses a situation where one disgraced a sleeping person who subsequently died without becoming aware of it and therefore never suffered any embarrassment. The gemara leaves unresolved the question whether the family can demand payment for the vicarious disgrace to the family. This likely implies that, before the fact, the relatives have some right to prevent the act from being done.[5] There are many distinctions that might distinguish your case from the gemara’s, but it is noteworthy to see that the father’s feelings have some grounds in Jewish ethics and should be taken into account.
If this question were to be presented to a religious court for adjudication, there could be some fascinating twists and complicated issues to hammer out. However, neither side of this hopefully friendly disagreement on this subjective, borderline matter has moral grounds to turn it into a quarrel. Neither your desire to include the picture nor your relative’s objection appears to be of cardinal importance (as family relationships are). You should reach a meeting of the minds on the matter of photoshopped images.