Well its like a full sig tutorial about pixel stretch... i have used photoshop CS only for the doubt...You can find this effect in a lot of sigs... or maybe this tutorial in others sites ^^ but this is officialy for pixel art.. so enjoy ;)
Ok first open a new document.. mine will be of 400x150 pxls With transparent background.
Press D to reset colors..
Go to filter > render > Clouds

Now create a new layer and strart brushing... i will be using grunge brushes, remember to brush with black and white always switching the colors... And this is my result:

If you dont want to make your background... click here to download some grungy bakcgrounds
Now open your render... im going to use this one:
Copy all and paste in your sig... and you will have something like that.. remember to make it more little for fit in the sig:

Now lets blend the image with the background...lets Ctrl+Click in your render layer in your renders pallete....

Now lets go to Select..Feather and choose 10 pix radius... this will depen of the sixe of your render...

Now it will take an a soft selection... now lets go to Image > Add layer Mask > REVEAL SELECTION... and will look like this:

Now if you dont like the result you can check out more blending options for a image here....Or you can choose your brush tool with black...and make shure the layer mask of your render is selected... and strart to brush in the places you want to dissapear the render..
lol... now lets go again
Now lets make the pixel stretch effect... its easy... take your Single marque tool... and choose a place in your render... that you want to stretch...
Dont deselect and press Ctrl+C and Ctrl+V and it will be pasted in a new layer

Now go to Edit > Transform > Scale... and press Shift to stretch the pixel correctly...
Now you should have something like this:

Move your pixel stretch layer above your render... and set the blend mode to overlay.. I also change the opacity to 80%

Thats all... i add to the sig some render effects... a contrast/brightness layer, text, border, and other effects... thats all... now you have your pixel stretch sig....
If you want to know a detailed step... just post it and let me know ;)
Final Result: