GIMP :: Blending Images Into The Background

Basically I've got the cut out that I want to blend into a picture, and what I do is get the images as near the centre of the canvas as I can, then copy and paste a new layer. Take the new layer and reduce it in size by say 95%, then try to centre it within the original image behind is as best I can. Select round it with the fuzzy select tool, then delete the smaller image. Move back to the original image and then add mask layer and use gradient blur to introduce a gradually fading of a few pixels round the edges.

The trouble is this method is not really good for complex shapes and often involves some iWarping to get the smaller image within the boundary of the larger one. So my question is, is there an easy way to fuzzy select round an image boundary that can introduce an arbitrarily chosen margin, say 5 or 10 pixels?

Anyway this is the kind of thing I am working on at the moment, making trippy fantasy images using dead animal's skulls.