EasyApps XP supports the new Truecolor Icon w/Alpha channel, allowing for variable pixel transparency.

Version 7.0.2 - fixes some installation problems

Screen Shot

IconEasel XP is a complete Windows icon and cursor editor, including animated cursors, and it also sports all the standard drawing tools you'd expect in an editor, plus dithering tools, gamma adjustment, RGB adjustment, Gradient Fill, Text Tool, complete Rotation, and much more.  With support for icons ranging in size from 16x16 to 64x64 and colors from monochrome to 24 bit truecolor with alpha channel support, this should fill your icon editing needs.

EasyIcons XP will allow you to manage your icons by creating and maintaining icon libraries.  Extract icons from other .exe or .dll type files and edit the icons and put them back into the same file or save them in a library, or as an individual .ico(icon) or .bmp(bitmap) file.  If you use IconEasel XP as your editor, you can edit icons in any library, without extracting them first.  EasyIcons XP will also compile several individual icons into a multi-image icon file. Easily add and remove images from multi-image icons, as well as easily creating them.

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Single Setup File: