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Well you can use ImageMagick to process the images and GD to do on the fly watermarks if you do not want the images to have a watermark permantly done
One drawback is to make sure you do not allow gif uploads.
If you want permenant watermarks your stuck with using one processor for both.
The reason you can get away with using ImageMagick to process images and GD to do on the fly watermarks is that the watermark.php is an external call that handles the overlay and reqwuires GD. But you can not have it the way around.
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