This one was requested quite often lately, so here’s a quick&dirty hack to make the Terminal transparent. The Terminal-side changes are pretty easy, just use ARGB visuals if possible. The VTE patch is really just a hack for the Xft backend with a hardcoded alpha value of 0xaaaa. You need to run a composition manager for this to work (i.e. xfwm4 with --compositor=on), and select solid background color in Terminal (as said, the VTE patch is just a really quick hack). The result is:

Anybody willing to create a clean patch for VTE (requires quite a lot of changes, but doable)?