Try using the threshold to make the image very basic is tone, then converting the black to blue using replace color, and applying the render clouds filter? Or maybe finding an image of clouds and overlaying them?
I have a band logo that has been rasterized already, and need to distort it along a curve (of a banner) as can be done with vector based fonts using the text warping program and arcing it. I have tried liquifying the image, but it messed the logo up too much to make that dramatic of a change...
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