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What happens is, some things remained transparent, and some things went opaque. To me that seemed weird because, shouldnt flash draw onto the Layerer window in one operation, like it must in IE (if you use IEFrames or some such thing).
However, what i found was, if i set on 'Bitmap Caching' on objects in flash 8, suddenly transparency was rendered, with large increase in speed. Now, the only problem i encountered so far was that a flash tree control has transparent text to the desktop, kind of visual wiggery which is undesirable. I know there must be some simple explanation or modification to get the speed increase + not get visual wiggery on certain objects. The search continues.
Ill keep ya'll posted with anything else i find. Certainly, a small mod like this may help for many of your projects which dont use some of the more complex controls. If anyone else can help with improvements, im sure the community would be greatful too.