Status: A little buggy -- but I use it every day with few problems.
Frustrated with never being able to find a good transparent terminal for Windows, while most modern Unix terminals support it, I hacked PuTTY to add transparency support. Actually, I added configurable support for background images, with a special case where the image used is automatically matched to the user's desktop.
Note that this is integrated background image support, not a transparency hack, so by design you can't see other windows or desktop icons behind the terminal window.
The PuTTY developers call this feature "pointless frippery [that] would bloat the binary to no useful purpose," so I don't expect my patch to be integrated into PuTTY-proper any time soon. I have tried to integrate the feature "correctly", however, with a new tab in the configuration dialog and use of existing configuration options where appropriate (like the default background color, which is used to apply opacity (shading) settings to the background image).
There's at least one other patch out in the wild that does this: TransPutty. I have not used it because I didn't know it existed when I wrote my patches, but from the description of its most recent release as of this writing, it sounds like it's quite a bit more limited.