Create a texture with Alpha channel in Photoshop and save as a TGA file to upload into Second Life.
Open your JPG or other file.
and open the channels panel.
Use Magic Wand or Select by Color to select the portion to be transparent.
Inverse the selection to copy the foreground image.
Create a new channel – the Alpha channel.
Take the Defaults.
The Channels Panel
Copy the Image from the RGB to the Alpha Channel.
Use Levels to adjust the Brightness of the Alpha channel.
Import the file into Second Life
Imported file with hatched pattern for the transparent portions.