[Quib]

It's not a display bug. Actually I prefer the native DDS style/TGA version of transparency. In Photoshop, transparency for DDS and TGA is a channel (alongside R G and B layers) and can be edited per pixel really easily.

So transparency isn't showing incorrectly, you're just used to it being displayed differently.

So, it's this alpha channel that EQ2 uses for transparency, the color of areas that are 100% transparent doesn't matter, since you won't see them. Personally, I always go with a 0,0,0 black since the texture compression can cause areas to bleed into eachother a little. When people use a converter or make the 100% transparent areas white, things seem to have slightly highlighted edges because the white bleeds over, black makes it a little darker at the edges, but this isn't usually a bad thing.

Quib

Edit: Attached a screenshot of the alpha channel for the default window_elements.generic.dds file. Ctrl+4 is Photoshop's shortcut to get to the alpha channel. Ctrl+~ to get back to normal RGB.