I found a webpage which explains how to use clipping paths in Photoshop. This is really really useful for when you have a bitmap image (like JPG or TIFF) that you want to clip to an irregular shape. Say you have a photograph that you want to clip to the shape of a circle, while maintaining transparency around the circle (i.e., if you want to place another photograph or illustration behind
the circle-shaped photo without that annoying white rectangle).http://www.sketchpad.net/paths3.htm
I tried this and it works! When you place the Photoshop EPS file into an InDesign document (viewing the screen at the default View -> Display Performance -> Typical Display), it will appear that the whole photograph is placed. But when you upgrade your view to View -> Display Performance -> High Quality Display, you will see the clipping path take effect!