For what it's worth:
I have found the Smudge tool in Photoshop 8> to be a useful tool for blending harsh lines of color. The trick is to use a brush other than the default.
I've posted a screen shot of the brush I use for the Smudge tool. You can see how, with some adjusting of the brush size and intensity, quick and dirty lines can be blended to achieve a more natural result. Then additional detail can be added.
With the basic color definitions below, the same tool gives a less harsh blend of the colors.