It would be nice to have a control that allows basic drawing functionality on the PictureEdit. Basically, a color picker, lines with optional arrow ends, drawing with mouse cursor, basic shapes like square and circle and maybe a highlighter.
I have an immediate need for such a control, but I also think others would find a lot of value in this.
I started working on a simple solution to your question because I thought it might make a good topic for my blog. Although I don't have a write-up done yet, I've attached a sample project illustrating the direction that I'm taking to accommodate simple drawing onto the PictureEdit control.
I've created a PictureEdit descendant control (named PictureEditCanvas) that can be dragged onto Forms like a standard control. I've added to additional items to the right-click context menu of the control: Drawing Tools and Save Image. The first will open a dialog window allowing to select from 3 tools: line, rectangle and ellipse. You can also set the shape fore color and border width. The PictureEditCanvas control is then changed into what I call "drawing mode" wherein you can click within the control to begin drawing the shape by dragging the mouse (use the escape key to cancel drawing).
The Save Image button will allow to save this modified image to your disk. Hopefully this provides you with a good starting point for your project.