Transparent picturebox overlay in winforms

I stumbled into an annoying problem when doing some graphics coding in a windows forms environment. The task seemed rather simple: Have a panel with a background image, drag images -in my case as listview items- onto that panel where a picturebox is shown to display the dragged image. When done, merge the picturebox images with the background to store the final picture as a single image.

My problem

When I drag an image (listview item) onto the panel a picturebox is created at the dragged location and the image is displayed. However, troubles arise when two pictureboxes overlap. Here's the catch: Setting transparency on your picturebox will make the background reflect the picturebox control background!
So the result lookst like this:

(I colored the second picturebox transparent area a little 'red-ish' to show the problem!)

Problem Solved?

I did some research on the net, but to no avail. So, I improvised:

1. We know the picturebox transparent area will reflect the picturebox parent image/foreground
2. I do need the complete picture anyway
3. There's no "free painting" involved, just 'reorganizing' pictures
4. Speed is not an issue, since by my (educated) guess, in my app there will be dragged less than well... lets say 50 images to the panel.
5. Considering point 4, I just might 'get away' with creating the final picture every time a picturebox is created/dragged/transformed...
6. Control tags can contain Objects (other controls!)

 Problem solved!

Now consider this layout:

1. A panel containing the background image (background)
2. A Panel containing the imaged where background and picturebox images are merged (canvas) and the parent of my pictureboxes
3. The pictureboxes dragged onto the canvas

The trick now is to 'reconstruct' the panel canvas background image every tima a picturebox is changed/added.

• We first create the background panel with the (clean) background image (pnlBackground).
• Next we create the canvas panel where pnlCanvas.Tag = pnlBackground. The canvas is a child control of the background!
• Every time a new picturebox is added, the picturbox.Tag = pnlBackground. The pictureboxes are children of the canvas!

Do you see where I'm going here?
Now on every event changing the pictureboxes on the canvas panel we call a function to reconstruct the canvas panel background image. Events like dragdrop on the canvas panel (adding a new picturebox) and events of the picturebox itself (dragging, rotating, etc)

The merging function should accept a picturebox and a panel (overload it). When called with a picturebox we have:
Panel pnlCanvas = sender.Tag as Panel (sender == picturebox)
Panel pnlBackground = pnlCanvas.Tag as Panel
Now, take the pnlBackground image and merge each picturebox image with it. The resulting image is your new pnlCanvas image.

The end result will look like this:

Each picturebox transparent area reflects the parent control foreground, which is the merged picture of pnlCanvas! Since the pictureboxes are still there (overlaying the pnlCanvas) they are still available for editing by the user (dragging, rotating, etc)

 There's lots of code available about merging images, so no code in this post. Just the basic idea on how I solved the problem. It might not be the best solution, but it works for me. As mentioned above: My 'canvas' will not contain over 50 pictureboxes so speed is not an issue to me, but 'reconstructing' (merging) the canvas picture will cost you...