Maybe I am approaching this completely wrong, but I can't figure it out how to apply alpha masks. When I apply a black and white mask to the "transparency" channel of a material (or a targa with alpha channel), the texture does become "cut out" but it also becomes half transparent everywhere and slightly darker, resulting in the following:
As you can see the leaves are cut out, but they and the trunk also became transparent, so you can see branches behind it, despite mask being black and white.
Replies
You might also want padding on edges of your color map, ie: have the color extend past the edges of your black and white alpha so you don't get that white bleeding through around the edges.
http://wiki.polycount.com/wiki/TransparencyMap#Sorting_Problems