For transparency, you have to set the material translucent in the exporter.
I did, and this is what happened.
I started the game to test it. I used the command to wear the hat. It's a secret, but it's supposed to let others see the player's head surrounded by the hat. I did, but; it still wasn't transparent, but I could see the contours of the player's head, but it had no color or face. Also;
Change the transparency of the 16x16 PNG?
I used the Gradient Tool and Color Picker to pick a quite transparent color. I used it ingame, but it was all black. Not transparent, just black. I tried other transparent colors, but it was still black.