I'm just trying to give an alternative solution to what you're trying to accomplish. I still think an icon is more appropriate because its easily and usually instantly recognizable. I've never seen dimmed players in online games if they are paused/idle/AFK/whatever. Usually an icon or text is used to describe state because its quick and efficient as well as practical
What also comes to mind when seeing a transparent player is that they are possibly dead or a ghost (in the case of a certain MMO).
This doesn't mean I disagree with being able to set the transparency level of the player (that could provide a nice range of effects). I just disagree with your application of such a potential feature.