I’m sure most readers are aware of of youngpup’s Sleight code snippet for achieving PNG alpha transparency in Win IE 5.5+. If not, go look. You may find it useful.
On a project today, we wanted to implement a translucent PNG effect on some dropdown menus. Youngpup’s code only deals with inline images, not background images so I had to roll my own. You can download it. The instructions are just the same as Sleight.
Kudos to youngpup for the neat code, some of which I borrowed, some of which I replaced. It uses browser sniffing, which I’d normally avoid, but I think it’s okay in this context. It should fail gracefully if the sniff goes awry.
Update: The script linked above is now a revised version. See my notes.