Just use a two-colour gradient - dark to light. It looks a bit weird having that dark circle behind his neck.
Otherwise, this is good. Now zoom WAY in and start masking properly.
As I mentioned earlier, I used a radial gradient rather than a linear one, but I think what you've done here will totally work. Go ahead and start your precise masking now.
No no no!!!!! You don't use FastStone any more, because you have Bridge.
FastStone is great, but Bridge is heaps better.
http://www.damiensymonds.net/bridge-video
No, don't do the marquee thing. It's limiting yourself too much later, in terms of print shapes. Take the time to mask the background around the WHOLE horse.
Gosh yes, when you print a photo that tiny, it forces you to examine it much more closely than a larger photo. I'd say you're noticing the printing dots that have always been there, you've just never looked closely before.