Am still working on other things, but after seeing today's Photoshop User TV episode I got inspired to do the above. Or rather, I got an idea for how to do things better =) Or at least simpler. I'm using just a layer style to do what Dave Cross there needed two smart objects and a filter to do. Read on for more info on how I did it.
Stroke settings (Click the image to see it bigger)
Though it's lower in the list the stroke is where this effect begins, so I start with it. The effect calls for a stroke with a transparent "line" or area between it and the text, so I'm using the stroke to create the transparency. I do that by making it black, and the setting the Blend Mode to Screen, so all black areas become transparent. The Size controls the area that's transparent.
Outer Glow settings (Click the image to see it bigger)
Then I use the Outer Glow to create the stroke, another reminder that you don't have to use the effects for what their names tell you to. By having the Spread set to 100% I get a solid line around the object rather than a blurry glow. Then I increase the Size so the glow (=stroke ;-) ) reaches beyond the area that the greedy Stroke occupies so that it appears, creating the stroke I want. I say that the Stroke effect is greedy because it's "punching a hole" in the other effects so that it's like they're not there, but just in the area the stroke occupies, so the areas outside (or inside for that matter) are not effected, allowing for effects like this where the stroke creates transparency.
A few words about the image in general
Following the example of the tutorial in the episode I've chosen to create an image for a fictional sports team. I'm assuming the name of his (Baskerville Tigers) is inspired by the name of a font and didn't want to be less creative so I chose the font Andika as that's one of my personal favorites (not in all cases, but there's something special about it in my humble opinion). Then I needed to come up with a cool animal name, and since I recently read Twenty Thousand Leagues Under the Sea by Jules Verne my mind went to the argonaut, and in the end I went all 19th century with images and fonts inspired by that period (apart from Andika, but I decided to keep it anyway).