Image cutouts in Keynote

I have come across some interesting Keynote files that contain some slides that I really like. One uses what is called a 'cutout' on top of an image/photo, but it is not part of the master slide, and I am not certain how to recreate a similar effect on my own.
The slide is a standard slide with a header text box only. Then there is an image, which is actually a screen capture of a dialog box from an application. On top of this is a 'cutout', which appears to be another image file, the same size as the slide (or larger) that has some transparency applied, and a rectangular region within the center of the slide so that a selected area of the dialog is clear and the remainder is greyed-over, simulating a highlighting of that area of the dialog.
I can copy and paste these two images, but the 'cutout' just appears to be a large black rectangle with a smaller rectangle drawn within it. I have used Canvas and Graphic Converter to attempt to examine it, but cannot determine exactly what it is or how to manipulate this one or create a new one from scratch. I do NOT use PhotoShop, and likely never will -- too expensive and I do not do enough graphics to justify the price or the size of the package on my system.
I like the effect and would like to use it myself, but do not understand how. I have read several postings here that indicate this can be done, and that shapes in Keynote can even be used as cutouts, but I cannot figure out how to achieve this. Inside Keynote 3 I can apply a cutout to an image, but that simply lets me mask all but a part of the image -- I want to have the cutout cover the image and permit the hole expose a portion of the image but the remainder to only partially obscure the remainder, so that it appears dimmed.
Using Canvas or GraphicConverter, how do I create the cutout image itself?

I created a Keynote file similar to the one you describe, perhaps you are referring to this:
http://www.keynoteuser.com/~newsimages/WWDC_ideas.zip
The cutout I used is not an image but is a custom shape used to grey out background distractions. If you would like to use this shape, simply copy and paste it into your own presentation. Because this is a shape, you can adjust the fill color, opacity and line thickness to fit your presentation. For a light colored background I recommend a black fill color with 30-40% opacity. For a light colored background use a white fill color. Since the shape is much larger than the slide, you can reposition it to fit over the area you wish to highlight. Changing the height and width of the shape also changes the size of the inner rectangle, allowing you to customize it over your area of interest.
Creating your own cutout shapes is fairly easy. I created mine with Inkscape, saved as SVG then imported the shape into Keynote with svg2key. Inkscape is a free application, but runs in the X11 environment, which you can install from the Developer Tools on you Tiger installation disc.
Other cheap alternatives to Photoshop/Illustrator are EasyDraw, Intaglio, OmniGraffle, Stone Create and Lineform.
Instructions for creating cutout shapes are similar for these apps, but here's how to do it with Canvas X. I am not very familiar with Canvas, so you'll have to bear with me.
1. Draw a rectangle roughly 1000x1500 pixels in size (larger than your keynote slide).
2. Draw a second rectangle or oval shape roughly 100x150 pixels in size (1/10 the size of the first).
3. Center the smaller rectangle over the first
4. Select both rectangles then choose Effects > Combine... from the menu. Then select "Subtract Front" from the options.
5. You should now have a cutout shape. Fill this with black.
At this point you will need to decide how you are going to use the cutout. If you want to use it as a shape in Keynote, save it as a SVG file then use my command-line utility svg2key to move it into Keynote. I was able to do this with Canvas X, but an older version of Canvas may not have SVG export capability.
If you want to use the cutout as an image, try saving it as a PNG file and preserve the transparency. Theoretically this should work, but for some reason the transparency was lost when I tried this with Canvas. It always works for me in Photoshop. Not sure if it's my ignorance or if this is a bug in Canvas. Anyway I simply cheated by copying the shape from Canvas, launched Preview and selected "New from Clipboard", then saved the file as PNG with alpha. I was able to import this image into Keynote with the alpha transparency intact. In Keynote, adjust the opacity of the cutout to 40% with the inspector tool to give it the grayed out look.
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