I'm running 4.3.0RC2 with the built in gd library.

What I'm trying to do is create a transparent subimage from a series of pngs that have an 8 bit alpha channel.  I then can resize the subimage, rotate it, whatever over another photograph.

I realize there's the imagecolortransparent() function so you can specify one color on your image as transparent, but this does not help the case when you want full 8-bit transparency.

Expected results:  The subimage should have an 8-bit alpha channel like the png's that's it's created from and should be transparent when imagecopy()'d over the photoimage.

Actual results:  I get a black box where I tried to copy the image.

Web page source:  http://pimpbot.qooqle.com/gid/php_bug1/
(example png and jpg images I used are loacated here)

Example source:
<?
// load photo image
$photo_img = imagecreatefromjpeg('images/kittybath.jpg');
imagealphablending($photo_img, TRUE);

// load just one letter for now to test
// this is a transparent png with an 8 bit alpha channel
$letter_img = imagecreatefrompng('images/S.png');
imagealphablending($letter_img, TRUE);
$x = imagesx($letter_img);
$y = imagesy($letter_img);

// create the words image, same size as the letter for now
// this is also referred to as the subimage, it should also have an 8 bit alpha channel
// like the letter_img
$words_img = imagecreate($x, $y);
imagepalettecopy($words_img, $letter_img);
imagealphablending($words_img, TRUE);

// copy letter image onto words image
imagecopy($words_img, $letter_img, 0, 0, 0, 0, $x, $y);

// now that we have the words image, we can resize it, rotate it, etc
// but we won't do that for now to keep things simple

// copy words image onto photo image
imagecopy($photo_img, $words_img, 50, 50, 0, 0, $x, $y);

// write out new image
imagejpeg($photo_img, 'images/new.jpg', 90);
?>