Crossword Genius

Gag involving university in alteration of image (7)

Ross

I believe the answer is:

retouch

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'alteration of image' is the definition.
Although both the answer and definition are verbs in their base form, I cannot understand how one could define the other.

'gag involving university' is the wordplay.
'gag' becomes 'retch' (I've seen this before).
'involving' means one lot of letters goes inside another.
'university' becomes 'ou'.
'retch' going around 'ou' is 'RETOUCH'.

'in' is the link.

Can you help me to learn more?

(Other definitions for retouch that I've seen before include "Improve a photo, with a pencil say" , "Correct painting" , "Make slight improvements to (a photo/picture)" , "Fine-tune" , "Paint over" .)

I've seen this clue in The Independent.
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