[jws]

…if we had a lossy image format with an alpha channel…

Just what I thought last time this came up. Built it. No one came.

http://jim.studt.net/jpeg-alpha/

(I haven't looked at that code in 18 months, but it explores some options and lets you have JPEG images with alpha channels in your browser.)

[ronaldj]

I've actually used this technique before. You can also use an SVG clip path to do something similar in Firefox. When I used this technique I shipped the mask as a separate file as I wasn't familiar enough with the file format to realize I could attach it. The 63KB limit when attaching the mask to the image might be too close.

If you make an app that can take a PNG and convert it to JPEG with alpha channel can you let me know? I would be VERY interested in this.