Here is a link to 3D displacement mapping - although it is for ShapeShifter AE - this principle applies to all of our products. The algorithm we use does vary between our products. The bundled version (Digieffects FreeForm) + FreeForm V2 share one algorithm. FreeForm Pro + ShapeShifter AE use a more advanced version of displacement mapping. Working 16 bpc is a must in both cases.
The link to the tutorial:
http://reels.creativecow.net/film/shapeshifter-ae-the-basics-part-2
The sort answer, you will not be able to use the image you referenced as is, yo will need to modify it including blurring it. Once you go through the tuorial you will understand much better.
HTH
Cheers,
Chris
mettle.com
