The above post does work with changing the flag inside the main .as file to true and republishing the main swf file.
The reason why you guys might not see the transparent effect is because IE6 doesn't display transparency in PNG files without the help of a filter. Firefox displays the transparency fine.
So my suggestion for noobs is, change:
Code:
var encoding:PNGEncoder;
bitmap_data=new BitmapData(stage.stageWidth,stage.stageHeight,false,0xDEDEDE);
bitmap_data.draw(clip);
byte_array=PNGEncoder.encode(bitmap_data);
to
Code:
var encoding:PNGEncoder;
bitmap_data=new BitmapData(stage.stageWidth,stage.stageHeight,true,0xDEDEDE);
bitmap_data.draw(clip);
byte_array=PNGEncoder.encode(bitmap_data);
and save it
republish the swf file to something with a different filename like main_eng_trans.swf
embed this new movie into a new html page and run it.
After the final image is displayed, right click it and "save file as" to the desktop and hey presto the image has transparency.
To get IE6 to display it properly is harder but check this post:
A List Apart: Articles: Cross-Browser Variable Opacity with PNG: A Real Solution
Cheers!