Okay this is the last post from me in this
thread - I just figured I would share so as to help anyone else from making the same mistake. The PNG with transparency is correctly set to TYPE_INT_ARGB (i.e. with alpha). What I did wrong (and it was my fault), was that I made the following instance method call in the class GraphicsConfiguration:
gc.createCompatibleImage(w, h, Transparency.BITMASK);
This resulted in being considered a "TYPE_CUSTOM " BufferedImage. As soon as I said:
gc.createCompatibleImage(w, h, Transparency.TRANSLUCENT);
The BufferedImage.getType returned TYPE_INT_ARGB (== 2)
Sorry for all the posts.