Can someone explain to me how to do this in Paint .Net (or PS)

Just take this gradient image and put it over the area you want to "rainbow". Set gradient layer's blend mode to multiply, overlay or color (varies depending on image). This is based on the area to be "rainbowed" being white. Make a mask.

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NO NO NO NO

You don't do that with photoshop - you have to get 7 guys and have them all eat different colored popsicles. Then in order they each go down on the horse with the first person going the deepest and then one by one each taking the horse rod less and less. BOOM, rainbow dick.