As for how you'd do the vignette. It depends on how much control you want. For example, using a vector ellipse you can create a selection, then use that selection inside the vignette command. The problem with this is you can't change the shape once you're in the command. So if it's not quite right you have to keep jumping in and out of the command to adjust the vector and re-create the selection. Obviously, the "raster selection" option inside the vignette command was not meant for this kind of use. It was meant more for a very precise selection something you wouldn't be tweaking a lot to get perfect.
For the most control, while also being time-consuming, you can do a manual method like you describe.
For example:
1) Draw out ellipse with preset shape tool
2) Selectsion -> From vector Object
3) Hide vector object and select layer you want to perform effect on
4) Selection -> Modify selection -> Feather #gives it a soft edge
5) Promote Selection to layer
6) Selections -> None
7) Select Background layer
9) Darken
10) Blur
11) Select main layer, if not bright enough, brighten.
A lot more work, but far more control over the final look.
