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mivox - 6:52 pm on Dec 5, 2002 (gmt 0)
If you're willing to risk older browsers seeing some strange, ugly edges on your buttons, using PNG format would allow the transparent canvas idea to have the desired effect. Check out this page [libpng.org] for browser support test images and screenshots from various browsers...
Problem with the transparent canvas is that the GIF89 file format does not support alpha transparency... so you'd end up with a button that looked like it was created on a white canvas. Not good.