I opened the original image in ACR to adjust settings to my taste
Then in PS, ran Buzz simplifier on a duplicate image layer. Smudged the edges into the new background layer.
Added a new background layer filled with soft off-white (same color as lace on dress).
Added Soft light mode texture layer.
Masked top layers so that faces wouldn't be degraded by the filter effects.
forum discussion: http://forums.dpreview.com/forums/read.asp?forum=1006&message=27589066
original image by GCam: