I think you can print onto tranfer paper from PS, however it also depends on how big your making the final product. If the original needs to be blown up to a bigger size then you run into Pixelation issues and should use a program like Corel or Illustrator to vectorize the design so that you can adjust the size without issue. (this mostly happens when you scan an original design or drawing then manipulate it in PS). If your creating the design in PS already then I don't know if you will have quite the same problem, but you can def. test by enlarging your design in PS and see how pixilated it gets. If you dont need to enlarge the design then I say your golden and can print to tranfer paper.
I use Photoshop a lot for my transfer desings. Just set it up the size you want it to print, "flip" the final image and print. You can merge all your layers, then go to Image/Rotate Canvas/Flip Horizontal to have your design ready to print on heat transfer paper.
Absolutely. Just be sure that when you create your design that you use the right color space, cmyk or rgb dependent upon your printer. Most smaller desktops are going to use cmyk. Create your graphic at 300dpi and preferably at the size your ultimately intend to print. You can print using the Photoshop native document but I normally save that with the layers and then flatten the image and save that one as a tiff that I use to print. Photoshop does a great job with the creative process, although it is primarily a photo editing application. You can also produce vector components also by using the pen tool and I believe type is produced as vectors anyway. Good luck
Edit -JPSS paper. Great on white and light colors
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