Cool idea -- you could use ModPodge to stick the photos on.
Do you want to use the actual picture for the project? If so, consider making copies, scan them etc.
Yes, modpodge will work. Have fun.
I would get them printed on regular paper (but at a copy shop so they use a laser printer so the ink won't run) before decoupaging them. Thinner paper is so much easier to work with than thick photo paper.
I agree with Emily. This is what I did in making a photo border for a frame.