She made her reputation shilling for Hitler.
I don't doubt that propaganda exists, and in fact is pervasive. I'm unconvinced that this is it. The alterations to the photo made it uglier -- even if they hadn't been so clumsy, they wouldn't have added anything to the political content or emotional impact.
Did Reuters fail to live up to widely-accepted ethical standards? No question. Did Reuters fail to live up to its own stated standards? No question. Did Reuters fail to live up to the standards of image quality expected of someone shooting kids' portraits at the local K-Mart, let alone a major news organization? No question.
My only issue is that this was done in pursuit of a political agenda, because even if successful, it would have done nothing to further any agenda I can see.
FWIW, I regard that as infamy rather than fame.
Recall your Goebbels? I think these folks do.
The most brilliant propagandist technique will yield no success unless one fundamental principle is borne in mind constantly - it must confine itself to a few points and repeat them over and over.
Joseph Goebbels
In this case, they're going for sympathy. Making Beirut look like it's been laid waste to is part of the plan.