Please keep in mind that unless your display technology
natively supports window transparency, that isn't real transparency you're getting. Older versions of X
and Microsoft Windows
do not support transparency of objects they have been told to manage. On these systems, any transparent terminal emulators you see for those platforms are faking it
Faking it in this case usually consists of recurrently taking screenshots, and then painting the back of the terminal windows with faded versions of those screenshots. As tftv256 notes above, this involves quite a bit of crazy overhead and isn't realtime.
Quartz, the pdf-based display system in Mac OS X, does support full, real transparency. As in you can have a transparent terminal and move around windows behind it, play quicktime movies or games behind it, anything, and it will show through not as an approximation drawn there by the terminal app but as the actual objects being displayed through the transparent window.
If you want the Terminal in Mac OS X to be partially transparent, enter this (CASE SENSITIVE) at the command line:
defaults write com.apple.Terminal TerminalOpaqueness x
...where x is a number between 0 and 1.0. As with all terminal preferences, transparency level does not take effect until a new window is opened. Your happiness (if any) with this hack will depend lots on the background color you have chosen for your terminal windows, although setting 0 opaqueness tends to be a fairly interesting experience.
Windows XP has the ability to have certain windows be partially transparent. I am not sure how to toggle it, and in all the screenshots i have seen, the entire window was faded-- i.e., the window title/scrollbar/window text were see-through as well as the background, as opposed to the os x terminal which is smart enough to only make the background of the terminal transparent..
42forty-two42 says re transparent terminal emulator: The current version of XFree86(4.1.0, methinks) natively supports transparency via XRender.