This is a relatively easy effect that you can use that can be used to make some very nice looking graphics. This tutorial is using Adobe Photoshop.

STEP 1:
First you need to choose an image. For this tutorial I'll be using this lovely Sesshoumaru image:



STEP 2:
Now you need to colorize the image. Choose any color in the selector. I'm using a purple color. Now go to Image >> Adjust >> Hue/Saturation. Check the box that says colorize. Play around with the Hue/Saturation/Lightness until you like the color.



Now you should have something like this:



STEP 3:
Now it's time to pixel stretch! First duplicate the original layer. Now, using the single marquee tool (shown below), select the edge of the image.



Now select Edit >> Free Transform. You should have something like this:



STEP 4:
Now it's time to play around with this layer. Depending on the image you may use different effects. Try adjusting the opacity of the layer, or right click the layer and play around with the various layer options. For my image I used the screen option.

STEP 5:
Now go back to the original image, and duplicate it yet again. Repeat the steps on this layer as well, this time changing the angles of the pixel stretch. Play around with it until you like what you see. Use multiple layers, using different angles and different layer options if you like. My final image looks like this:



Now all you have to do is add the final touches, text, borders, etc! Have fun!!