Mark, I appreciate the feedback but I don't think this addresses the issue I'm having. I attached a video that may clear things up. As you can see, transparency seems to be working fine until I apply a material to the terrain. After doing so, it doesn't seem to matter how much I change the transparency of the element or the level - it doesn't have an effect.
By contrast, when I use a similar process for solids (i.e. create the solid, attach material, and set display style to transparent), everything seems to work as expected. Please let me know where I'm going wrong.
(Please visit the site to view this video)