basically a shadow on a static background is just a colour blended with the original pixel colour by a gradiated amount. however, with transparent backgrounds tehres no original pixel colour, so instead of blending, its just a solid colour but with a gradiated alpha. the effect is the same, but because of the gradiated alpha, it only works if the filetype supports 256 alpha modes (or channels or whatever there called). png does support 256 alpha modes, but the format is still fairly new, so not many programs support them yet, which includes browsers. i know firefox supports them perfectly, but ie has a tendancy to add its own opaque bbackground, and from what i remember of opera, that just messes them up completely. not sure on others...
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