in your main script set d3d_autotransparenby to on. then make the areas you want transparent an off color from the rest of the image(if it is grass set this color to R+8, G+8,B+8...lighter or darker.) also paint the very top left pixel of the image this color, and you should be set, I recomend reading the manual about this setting, as it may explain it better than me. By using it you can use 24 bit images as opposed to 32.


Everybody Poops.
here are some tutorials I made.
http://www.acknexturk.com/blender/