I used your original image in photoshop cs5 expanded the canvas size, selected the blank area using the magic wand tool and used content-aware fill (shift+5) and it filled the image in perfectly.

I've never used photoshop elements, what version do you have? A quick google search show elements 9+ has content-aware fill. Anyway I tinkered with it for about 2 minutes using only basic tools and came up with this:

A little detail/texture is lost, however if this is acceptable I first expanded the canvas, then used a rectangular marquee to copy a section the same size as the addition, I used free transform to stretch the copied portion until the main lines/shapes basically matched, I then feathered the edges of the copy and stretched it to blend with the original, there will still be a border at this point. So I flattened the image and made two copies of the background. on the middle image apply a gaussian blur, on the top image a mask go through with a very soft brush on 100% and blur the border. You can change the opacity of the middle layer to find the best balance between too blurry and a brderline, if a small amount of birder can still be seen use the clone tool with a large soft brush at a low opacity and clone here and there. Hope this was remotely useful :)