Hi [USER=141962]@Celeste[/USER]
Yes this can be done with a Photoshop Action that you record (I recorded an Action that works yet I am sure it would require debugging to work in all possible Layer Stacks).
Yet, creating and debugging this Action would take a bit of time and patience to make it work it all Layer Stack cases.
If you don't have a ton of these images, I prefer [USER=132217]@JeffK[/USER] approach as the time investment to build the Action may not be worth it to just follow the simple manual approach.
Just my opinion of course
John Wheeler
ADDED NOTES:
The Action worked in the simple case to two Layers, One with a transparent area and not transparent area and the second Layer with the image to expand into the transparency area completely (not preserving the aspect ratio).
This particular Action leaves the second Layer as a Smart Object. An additional Action Step could be take to rasterize it.
I did enough work where this is just a proof of concept.:
Starting image and Layer:
[ATTACH=full]135596[/ATTACH]
Final Layers and Image:
[ATTACH=full]135597[/ATTACH]
