Help with Adobe Premiere Elements 8.0

Hello!
I recently began fooling around with Premiere elements and I had a couple of questions about it:  First, if you could please watch this video:  http://www.youtube.com/user/iTerabithia#p/search/6/01qfQSyq1WI      In the almost beginning it shows Lucy hug Edmund and then a shot of Lucy crying fades into it and then out again.  Do you know how to do that with Adobe Premiere Elements?  And also, how is that color achieved from the very beginning of the video?  And is there any way to do audio effects?  If you could please answer these questions I would appreciate it ever so much!
Thanks!

John T.,
Thanks. I should have added that info.
What does that little "scene" look like to you? I'm thinking a Video Clip on a higher Video Track, and maybe with less that 100% Opacity. Guess that if it covers the whole Frame, it would not be a PiP, officially, but would involve the same principles.
Appreciated,
Hunt - who sometimes gets lost in acronyms and jargon!

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    From: Bill Hunt <[email protected]>
    To: Tommy Midyette <[email protected]>
    Date: 6/3/2010 10:01:24 AM
    Subject: need help with Adobe Premiere Elements 2
    >
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    Date: Wed, 1 Jan 2014 19:39:00 -0800
    From: [email protected]
    To: [email protected]
    Subject: problem with Adobe Premiere Elements 10 : error DW046
        Re: problem with Adobe Premiere Elements 10 : error DW046
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