More ideas for using photographs
There are ways to incorporate photographs into your purse that don't involve transfer to fabric.
For example, Red Camper sells bags made with vintage slides.
(link found via fototiller)
I can envision bags made with old negatives also.
Also, have you seen the magnets made from half marbles, with paper or fabric underneath?
Well, perhaps you could craft some with photos, and use them to embellish your bag.
Tutorial at Not Martha.
Or make them into charms by adding polymer clay. Tutorial
Or you could embellish your purse with photos placed inside bottle caps.
Tutorial using Modge Podge.
Amazing ideas using resin.
You can purchase shrink plastic for printers, and make charms from photos to embellish your purse.
Don't forget to hole punch before baking!
Or you could print out the photos, then make the plastic itself (without baking) into a purse.
Use it as you would plastic canvas.
Perhaps you could laminate paper photographs, and sew these together as you would vinyl?
Tutorial for a laminated paper purse from HGTV.
Tutorial for cigar box purse, using decal paper, from HGTV.