Can I suggest that you put something behind the surface shown in your video - say a thick red line - and try the transparency again. I remember doing something similar what you have done, and seeing no difference, but once there was something behind, it did show up the changes. Just to check that the terrain is becoming transparent.
I normally have aerial photos attached to my terrain (in a demo) and I have the terrain semi-transparent, so I know it is possible (please note, I am not in any way a visualisation guru - I just know I got it working) :-)