Sindre,
I was playing with this and got a pretty nice transition just with the distort->liquify effect. I'm not sure that this will "come out of the frame" the way your wanting so well, but tracked and matted for the inside of the frame I really like it.
For other threads about Mr. Mercury look through the following link, although your situation isn't directly addressed they may be helpful in understanding the effect.
http://forums.creativecow.net/tags/cc_mr._mercury
Best,
Ben