Im not sure if this is correct, but i think you need to use a shader or a fixed function in order to blend textures. I ran some tests with alpha maps too, but it never shows the underline texture because all the model assumes the alpha information.
Like i said maybe im wrong, but its easy to blend two or more textures with a multitexturing shader and an alpha map or rgb information skin. However, creating dinamically the second skin with a shader attached i dont think its easy too.
Sorry for not helping you more, maybe the shaders gurus can...but you have A5 engine...