A photograph is–or should be–a record of a moment in time, presented as it happened, for the viewer to interpret as s/he sees fit.
For whatever it’s worth, I agree that presenting a doctored photo as fact is entirely inappropriate–no matter how little change is involved–and the newspaper was quite right to sack the photographer.
It is a rather obvious fake, especially around the face and head of the soldier.
Altering a news photograph for composition or content is always wrong because of the slippery slope involved. In this case it was a simple change, but in the next it may not be. It only takes a few of these to erode the public’s trust.
Print photojournalism is the last frontier of journalistic objectivity. Although images are framed to be as poignant as possible, and selected for content, we can trust that if we were there at that time, looking through the lens, we would have seen exactly that. Once trust like that is taken away, it is gone forever.