As you may know the PNG file format for pictures has excellent support for alpha transparency. But you may also know that Internet Explorer 6.0 does not support alpha transparency for PNGs. You can notice this if you look at some of the PNGs I published in my image gallery.
The thumbnails really look bad! This has to do with how Community Server generates JPG thumbnails from the original PNGs.
If you view the original version (i.e. the unscaled version as published) you can sometimes see that the background color of the picture changes. In Internet Explorer 6.0 the outcome is unpredictable and the image generally still looks bad. But in FireFox (and presumably in Opera and Safari) they will look great. The pictures will blend in nicely with whatever background color you have set (default color is white).
Microsoft has confirmed that Internet Explorer 7.0 will finally support alpha transparency in PNGs. There is a blog entry that details how difficult it was to implement this.
What is really beyond me is why PowerPoint was able support this feature starting from version 2000, yet IE 6.0 released in 2001 did not support alpha transparency! Couldn't the IE guys have borrowed the code from the PowerPoint guys?!
To show off that the alpha transparency really works in PowerPoint, I created a overlay picture of three PNGs and a background picture and made a screenshot. This image also shows that the three PNGs have a proper alpha channel.