Hmm so I think I've found the trick to making clothing transparent for anyone else wanting to know. When you edit the alpha layer, use a lower opacity brush (I set it to around 25-30% opacity but I think depending on how transparent you want the texture to be then you set it accordingly) and...
This was a very helpful guide and I too would like to know how to make things transparent. I was able to make a few recolors but can't quite figure out transparency yet.
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