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Note: At this point in time I'm not sure whether the alpha value only relates to the BMD's background alpha, or whether it also has something to do with allowing transparent pixels in an image.
Yes, the alphaChannel parameter does actually determine whether any pixels in the image can have transparency or not. You can set the color of a pixel using setPixel32 when the alphaChannel is turned on. You can also use the fourth parameter fillColor to initialize the bitmapdata object with transparent pixels: