Some of you may find this interesting (or even helpful).<ul><li><a href="http://www.dpchallenge.com/tutorial.php?TUTORIAL_ID=22">http://www.dpchallenge.com/tutorial.php?TUTORIAL_ID=22</a</li></ul>

does it save money or just time?

Time is a toss-up. If you already have the equipment setup and are familiar with PS, should be a no-brainer.

Took me 1 hour, and cost me less than a dollar, vs. finding and driving to a place that does these and forking out $20-$30 for a few mugshots.

The state department wasn't too fussy about the lighting and backdrop. I had an off white wall behind me, and used a single bounce flash for the picture. This created a shadow on the wall behind me. I had them printed at a local drugstore on their instant print machine. No issues...passport came back in 6 weeks.

I did mine with no photoshop or anything. Just setup the camera far enough back that a standard 4x6 will be sized properly that your head and shoulders fit in the 2x2 area. Print. Cut with plain scissors. Done.

but all I did was crop.

... I took passport photos for my GF and me and I remember the federal regulations saying you must not be smiling in the pictures. Anyway, I mailed our photos in and weeks later we got our passports.
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they'll think your documentation is faux and detain you in an interrogation room for "questioning".

I shot a LOT of passport photos working in the camera shop (age 16).