wally? Um.. No You don't
{ defines Textures with the "Blue" mask.
Make the last entry in the pal. Pure Blue, in your brush based entity, make sure the Render mode is Solid, and Render FX is 255
For models, you need the new and updated Game DLL (Steamy hl) that suppourts masking in model testures.
So, Hl v1.1.1.0 Will Not allow you to have masked textures in models.
That's it.
for Sprites, The Blue, should actually be Black - since in sprites, Black is invisible, and how dark a colour is determines how transparent it is.
That's Additive sprites btw,
A good sprite proggy will let you make a different kind of sprite, one with a pink/purple background - that's for using sprites where there is black.
Have a look throught the pack, and find agrunt.spr (or something similar)
That's got the different type of sprityness there.
Oh, wait, you didn't ask about models, oh well... too late, its staying in there