In PS, 3 layers (or more) using vector masks on the layers above the background. Use linear gradients on the vector masks to create the smooth transition and use the length of the gradient to adjust the width of the transition between images. (obviously you need to complete the change before the edge of the image else you will still see the edge just at a lower opacity)
Very easy in Photoshop. Put the two images on different layers and then on the top layer use a gradient mask horizontally to create the fade between the two.
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