Nope, apart from the outside (the grey-checkered area), nothing of the actual texture (the purple areas) is transparent.
There are a few other textures for the dragon, like "shuffle.png" and "dragon.png." I've converted my textures to appear similar to those ones from the default pack (shuffle.png is the texture completely whited out but with transparency still there for the outside, and dragon.png is just the texture grey'd out). I have a feeling the problem is with my dragon.png texture, but I'm not sure...
