Here's a screen grab showing the muzzle flash images redrawn with an alpha channel. The edges softly blend into the background, but where multiple images overlay each other, the lower texture is blocked out completely by the semi-transparent pixels from the texture above, and the ground shows through creating a black "outline".

http://www.resonantedge.com/trx/temp/alphablend.jpg

I know you're aware of this problem already Paul. Do you think it will be possible to change this or is it a permanent limitation?