Bob, this is what I did using PS5.0, which is about 15 years old!
1-Select-Color Range and click on the blown out sky
2-Select-Inverse (to get everything but the sky)
3-File-New (to create an identical size image file)
4-Adjust the color/texture of the background in the new file
5-Copy the selection from the original file, and paste it into the new file
6-I also selected each of the eyes and lightened them a bit
7-Flatten the image and save the new file

I know there is an easier way, but I haven't used my dinosaur version of PS for awhile, and I don't have PSE8 this week (which makes this kind of change even easier).