1. create a new layer at the top of the stack.
2. paint with white over the eyes (yes, the whole thing).
3. blur so the edges get nice and soft.
4. change the layer mode to overlay.
5. lower the opacity till it looks pleasing.

1. Open the image and save by another name (effectively makes sure you are working on a duplicate of the original).
2. Set the foreground color to 50% gray. Just click the foreground color swatch in the toolbar, and set HSB values to H:0, S:0, B:50.
3. Create a new layer (Layer>New>Layer), and fill with the foreground color (created in the previous step) Edit>Fill, and choose Foreground as the Source. The image will turn gray.
4. Set the layer mode to Color. To do this open the Layers palette (Window>Layers), click Normal and choose Color from the list that pops up. The image will turn grayscale because you are applying gray as a color to the whole image. Now you are all set to make the effect happen by letting the color come through the gray.
5. Remove gray over the area where you want the color to come through. To do this, choose the Eraser tool (press E) and erase the areas of gray in your layer where you want color to come through. If you make a mistake, switch to the Brush tool (press B) and paint the gray back in.

I may just not be familiar enough with the tool, but this also does not seem to be able to accomplish the effect the original post was looking for except in a very rudimentary way (the Focal B&W effect). There is little control over the shape of the effect (you just get a round color area that you can move and/or blur). I think you'd see that other methods described here are not a lot of work -- just a few short steps -- and they provide a lot more control. Though they do require having Photoshop or Elements.

I hope that helps!

Also, do you need to convert to JPEG? It is a lossy format which will degrade your images (maybe slightly depending on your settings, but you do not state what those are).

We all work very hard to get image quality...and spend lots of time and money doing it. it is best to try to keep as much quality as possible by knowing what to do definitively with those images.

For example, a recent photo I worked for a friend on had very high noise in flower petals, so I carefully selected (with a med feathering) the inner-petal areas and applied agressive noise reduction I then inverted the selection to select the edges & center areas of the flowers and applied USM.

Also, PaintShopPro has far more noise reduction options: Camera noise removal which builds a profile for your camera, edge preserving smooth which helps keep edge detail while smoothing flatter surfaces, texture preserving smooth which would probably be best for the water noise you mention and Medium, which, as Richard mentioned, is basically a blurring approach.

I bought PaintShopPro9 for $25 on ebay. It also has a number of other features I like better than or not available in Elements (4). You might want to consider getting it too (v8 or v9 are, IMO, best, since I don't like what Corel did to it in vers X & up)

As you say, the best solution is avoidance.

Some things you can try here are more an approach to reduce the brightness and mediate the color.

1. create a new layer at the top of your layers stack.
2. set the layer mode to multiply.
3. choose the brush tool and paint in black over the iris.*
4. lower the opacity of the layer until pleased with the result.

*you can use a hard brush and blur, or a soft brush.

Even this will not solve all red-eye problems and may come with issues of its own. For example, the boy ends up having brown eyes here and from other hints I am guessing his natural color may be blue. The issue may be a residual issue from the intense red that was there...

The Photoshop method I use is along the lines of Hue/Saturation that Richard mentioned. I find it to be fairly quick and easy to perform:

1) Select each eye using the lasso tool capturing the entire iris.
2) Although not necessary, I create a new layer (Command J)for safety.
3) Open Hue/Saturation (Command U).
4) Instead of MASTER, choose REDS as the color you wish to modify.
5) Now move the SATURATION slider to the far left until the red is completely eliminated.
6) To darken the pupil, slide the LIGHTNESS control to an appropriate level.

Hope this helps.