Hi,
I haven't been here in a while & see that while I was away, there was a topic right up my alley!
One medium (oil), made by Marshall's is 'PM solution', which you can use to pre-treat rough surface paper before you paint (but you need to make sure that you buff it down so there's only the slightest coating left on the paper. But you can also other mediums as well.
You don't need to use photo oils (they are way over-priced). I only used them as long as I did because I did demos for Marshall's and used to get them for free. Most oil paints make some colors that are transparent. Gamblin makes a nice selection. I only use pencils for tiny details - the rest, I paint with Q-tips & cotton wads.
You can see some of my hand colored pictures here:
http://www.flickr.com/gothamtomatoIf you have trouble getting the hang of hand painting photos, I always suggest taking a painting class, because it is more about just learning to work with the paint.