Painting Alpha-blending, it's what Cyan does and now we can do it too!
Sort of. I have a way to paint alpha in Blender so that it will show up in the game! I'll give you some tips now since i don't have time to make a full tutorial now.
1. duplicate the object that you want to blend
2. make th duplicate have texture you want to blend into
3. go into the texture paint section of blender and paint black where you want alpha to be
4. paint
5. go into the face select mode of Bender and then go into the UV editor and take a look at you tex with black paint dots on it
6. save it as another file such as: if your texture was called rock.jpg call your altered texture rock_with_blending.jpg
7. go into gimp (or photoshop) and get the magic wand out
8. select the black spots with the wand and get rid of it (you should have a tex with alpha holes)
9. save a .png or whatever can handle alpha
10. go back into blender
11. replace your old texture with black holes in it with your new gimped (or photoshoped) texture
12. enjoy