This Drupal 6 module works around a limitation in IE7's PNG support so that
fade in/out transition effects work properly with PNGs that include
transparency.

More on the IE7 transparent PNG limitation:
IE7 is only able to apply a single filter to a particular element. A filter is
used to render PNG images that include transparency so an additional filter,
such as a jQuery fade in/out effect, applied to a PNG that includes
transparency produces "noise" (looks like a weak analogue tv signal) during the
transition. See http://blogs.msdn.com/ie/archive/2005/04/26/412263.aspx for
more information, especially the first point under "There are also a couple of
limitations worth mentioning" for more info.

The module is a "drupalisation" of a jQuery plugin written by Darko Zoroja
which can be found here:
http://stackoverflow.com/questions/1156985/jquery-cycle-ie7-transparent-png-problem.

Why is this not on drupal.org?
I attempted to submit this as a module, but was told it would be
better to incorporate it into one of the existing IE PNG fix modules.
Attempts were made to contact the maintainers of the existing modules,
but it would seem they have moved on from supporting tired old browsers ;-).