I've never used the watermark function in Paint Shop before. Is there any downside to using an embedded watermark on an image that will be incorporated into a design?

If I understand your question - my advice is: don't.

The watermark feature is usually reserved for viewing on screen. You're master image is designed to be printed.

Depending on the nature of the watermark it can be of varying degrees and visibility - all of which *might* have an undesired result in printing.

A watermark, however, for section thumbnails, promotional banners, etc. may be a suitable place for a watermark - and Cafepress offers a watermark option in our account settings for the larger preview image a customer sees. However, the master image used for printing remains untouched.