Raven X, if you look at trees and other certain models, you'll notice they utilize alpha blending using the alpha map.
There's no question on if the engine can load png's with alphas, it can always load all the data from the textures, but after that it's a question on what the engine uses this information for.
but from what I've notice it seems to be able to do an okay amount of stuff, and it's defined in currently hidden materials, which will most likely reveal itself when we get the tools.
An example:
a dds texture, namely a dxt1, is a 1:6 compressed RGB texture, each channel in this texture could be used for different things, one for tinting, one for transparency, another for specularity.
bumpmapping/normalmapping would not interfere with the outlining in any way, they're just a way for the rendering to light up models per pixels rather than per vertex.
borderlands uses very shader defined materials, normalmaps and stuff, along with outlines in a way very similar to elemental and it does not break the game:
