Today, users expect advanced user interfaces, and powerful user experiences on mobile devices. In order to meet these expectations, we need to take advantage of advance graphics techniques. The most of common of which is alpha blending.
Here is some information I have gathered on various ways to do alpha blending on Windows Mobile devices.
Alpha Mobile Controls
http://www.codeplex.com/alphamobilecontrols
AlphaMobileControls is a .NET Compact Framework 2.0 API offering WinForm Controls for Windows Mobile 5 or 6 able to handle images with alpha channel and alpha blending.

Chris Lorton’s Blog
http://blogs.msdn.com/chrislorton/default.aspx
There are two ways to do alpha blending in WM5: the AlphaBlend() function and with the Image COM object in the Imaging API.
Chris has a great post on how to take advantage of alpha blending in .NET Compact Framework.