Merge two images with GD Library, have 1 repeat in background - php

Question

I want to take an image that has transparency and then overlay that on top of a 60x60 (arbitrary size) image that repeats for the width and length of the first image...
So essentially use image 2 as a repeating background image that image 1 is on top of.
EDIT:
Okay, so I used One Trick Pony's solution, but tried to modify it to create a square image out of a rectangle if the width is less than the height, but not stretch the original image and instead center it. I was able to center the image but then the repeating background does not continue repeating after the overlay image stops.
Here is the code:
<?php
$overlay = imagecreatefrompng('../images/' . $_REQUEST['overlay']);
$repeating = '../images/' . $_REQUEST['repeating'];
$ext = explode('.', $_REQUEST['repeating']);
$ext = strtolower($ext[1]);
if ($ext == 'gif')
$repeating = imagecreatefromgif($repeating);
elseif ($ext == 'png')
$repeating = imagecreatefrompng($repeating);
elseif ($ext == 'jpg' || $ext == 'jpeg')
$repeating = imagecreatefromjpeg($repeating);
$w = imagesx($overlay);
$h = imagesy($overlay);
if ($w < $h)
$w = $h;
$output = imagecreatetruecolor($w, $h);
imagealphablending($output, true);
imagesettile($output, $repeating);
imagefill($output, 0, 0, IMG_COLOR_TILED);
imagedestroy($repeating);
$offsetx = ($w - imagesx($overlay)) / 2;
imagecopy($output, $overlay, $offsetx, 0, 0, 0, $w, $h);
imagedestroy($overlay);
header('Content-Type: image/png');
imagepng($output);
imagedestroy($output);
?>
EDIT 2:
Overlay: http://72.167.52.68/~viisi/ebaylist/images/back_test2.png
Repeating: http://72.167.52.68/~viisi/ebaylist/images/back_test.gif
Expected result (but continue the repeating across the whole image): http://72.167.52.68/~viisi/ebaylist/image/previewImage.php?overlay=back_test2.png&repeating=back_test.gif

Answer 1

$overlay = imagecreatefrompng('/path/to/transparent/image.png');
$repeating = imagecreatefrompng('/path/to/repeating/image.png');
// create a new image matching overlay size
$w = imagesx($overlay);
$h = imagesy($overlay);
$output = imagecreatetruecolor($w, $h);
imagealphablending($output, true);
imagesavealpha($output, true);
// tile repeating image on it
imagesettile($output, $repeating);
imagefill($output, 0, 0, IMG_COLOR_TILED);
imagedestroy($repeating);
// now add overlay on top
imagecopy($output, $overlay, 0, 0, 0, 0, $w, $h);
imagedestroy($overlay);
// send to screen
header('Content-Type: image/png');
imagepng($output);
imagedestroy($output);