So you want to cut out around the black lettering?
Okay for that, your best bet is going to be using the AI (Live Trace) auto-trace function to turn it into a vector. There are a couple tutorials for how to use it here:
The two things to remember when you do it are:
- Make sure that Ignore White is checked. (If you don’t ignore white areas during the trace, it makes a lot of extra parts that have to be deleted.)
- After you have Expanded the Trace results, set the fill color to null, (no Fill), and set a stroke color to some uniform color.