Thank you for kind words! :>

I used two passes:
- first one to color entity with the defined color and it also has ZFunc set to GREATER and ZWriteEnable set to FALSE.
- second one is a normal pass but with ZFunc set to LESS and ZWriteEnable set to TRUE.
I was amazed that it worked so easily

I also bumped on a more complex/difficult solution, where people suggested to used stencil buffer to draw a circular translucency around the given entity.
Here how it looked like:


Greets