How to draw a transparent stroke (or anyway clear part of an image) on the iPhone

This will do the trick:

CGContextSetBlendMode(context, kCGBlendModeClear)

I ended up using Bresenham's line algorithm (harkening back to the days of yore when I had to write my own graphics routines)...

- (void) contextEraseLine:(CGContextRef) ctx from:(CGPoint)startPoint to:(CGPoint) endPoint withThickness:(int)thickness {
    int x, cx, deltax, xstep,
    y, cy, deltay, ystep,
    error, st, dupe;

    int x0, y0, x1, y1;

    x0 = startPoint.x;
    y0 = startPoint.y;
    x1 = endPoint.x;
    y1 = endPoint.y;

    // find largest delta for pixel steps
    st = (abs(y1 - y0) > abs(x1 - x0));

    // if deltay > deltax then swap x,y
    if (st) {
        (x0 ^= y0); (y0 ^= x0); (x0 ^= y0); // swap(x0, y0);
        (x1 ^= y1); (y1 ^= x1); (x1 ^= y1); // swap(x1, y1);
    }

    deltax = abs(x1 - x0);
    deltay = abs(y1 - y0);
    error  = (deltax / 2);
    y = y0;

    if (x0 > x1) { xstep = -1; }
    else         { xstep =  1; }

    if (y0 > y1) { ystep = -1; }
    else         { ystep =  1; }

    for ((x = x0); (x != (x1 + xstep)); (x += xstep))
    {
        (cx = x); (cy = y); // copy of x, copy of y

        // if x,y swapped above, swap them back now
        if (st) { (cx ^= cy); (cy ^= cx); (cx ^= cy); }

        (dupe = 0); // initialize no dupe

        if(!dupe) { // if not a dupe, write it out
            //NSLog(@"(%2d, %2d)", cx, cy);

            CGContextClearRect(ctx, CGRectMake(cx, cy, thickness, thickness));

    }

        (error -= deltay); // converge toward end of line

        if (error < 0) { // not done yet
            (y += ystep);
            (error += deltax);
        }
    }
}

Phew! That's a long way to go to create a (somewhat) clunky eraser line.

To use it, do something like:

- (void)eraseStart {
    // erase lines
    UIGraphicsBeginImageContext(drawingBoard.size);
    ctx = UIGraphicsGetCurrentContext();
    CGContextDrawImage(ctx,CGRectMake(0,0,drawingBoard.size.width, drawingBoard.size.height),[drawingBoard CGImage]); 
}

- (void)eraseEnd {
    drawingBoard = UIGraphicsGetImageFromCurrentImageContext();
    UIGraphicsEndImageContext();

    [drawingView removeFromSuperview];
    [drawingView release];

    drawingView = [[UIImageView alloc] initWithImage:drawingBoard];
    drawingView.frame = CGRectMake(intEtchX, intEtchY, intEtchWidth, intEtchHeight);

    [self.view addSubview:drawingView];
}

This assumes you have already created a drawingView (UIImageView) and drawingBoard (UIImage).

Then, to erase a line, simply do something like:

CGContextRef ctx = UIGraphicsGetCurrentContext();
[self eraseStart];
[self contextEraseLine:ctx from:CGPointMake (x1, y1) to:CGPointMake (x2, y2) withThickness:10];
[self eraseEnd];

(replace x1, y1, x2, and y2 with appropriate values)...