Now, I've been thinking about which objects were and which objects were not affected by this change... and I agree with D'Lanor ... it seems that all the objects that were affected were actually sitting in front of an object with a stencil (in this case my main terrain texture) ... consequently, none of my shadows underground (where there is no stencil textures) were affected ... not sure if this will help anyone ... but it seems to be the case.
I also found that there was no need to "over" Pass Index (where I had transparent objects in front of other transparent objects (where neither contained a stencil) and they were both also in front of an object that DID have a stencil, I could set the first two objects to BOTH be PassIndex1 (in fact, making then different Pass Indexes actually caused strange things to happen to the first two objects (partial dissapearing and things) ...
Kato: The animated holograph ... that is done using TWO meshes vertext painted (to create the faded edges). The "back mesh" has the animated "slideshow" of the "bushbaby" and the plants (using texture animation IPO ... two "subjects" on one texture taking up half of the texture each, then using the IPO to move the xLOC 0.5 , every 4 seconds). The front mesh is a speckled "noise" texture ... that animates to a different xLoc & yLoc every frame (just random settings) for 10 frames, which produces a "TV static" effect. Both textures are semi-transparent ... (and in front of a stenciled object ! (the terrain) - hence the "borking" by 1.5.0 !).
I set both the meshes to PassIndex 1 ... and Bingo ...all working normally again