Pardon me if I am unaware of a feature that i should be using instead, but let's assume for the sake of argument that I have an image with a black background and contains 256 shades of grey to create the part of the image I want projected. Now I lay this image over a very colorful image and apply the [Transparent Blacks] FX. I believe that I will have varying levels of transparency from this effect. Is this correct?
By creating an image with true transparency (TIFF or PSD, for instance) I can always be assured that my images will look the way I intend them to.