Here are examples of what I was working with...
The first image shows's the Alpha Channel as Pink, as you can see part of the wings have the pink alpha channel showing through,
The second image is just showing the Alpha Channel, the areas in the first image where the pink was showing through the wings actually appears in shades of gray in the Alpha Channel.
As stated before the 100% Black part of the Alpha Channel is totally transparent, and the 100% White part of the Alpha Channel is totally opaque, and the Shades of Gray are Semi Transparent, when saved as the DXT3 format of DDS.