This paper introduces LACE, a co-creative system enabling professional artists to leverage generative AI through controlled prompting and iterative refinement within Photoshop. Addressing challenges in precision, iterative coherence, and workflow compatibility, LACE allows flexible control via layer-based editing and dual-mode collaboration (turn-taking and parallel). A pilot study (N=21) demonstrates significant improvements in user satisfaction, ownership, usability, and artistic perception compared to standard AI workflows. We offer comprehensive findings, system details, nuanced user feedback, and implications for integrating generative AI in professional art practices.