Problem: Having DisplayObjects overlap and fading alpha. The result is the two objects alphas combining in the overlapping regions. This creates a nasty overlay that will show all the layers below the top most. This is because flash fades all the clips inside the DisplayObject, not the container clip as a whole.

Solution: All you need to do is set the container clip BlendMode to LAYER (BlendMore.LAYER). The Zedia Flash Blog has put up a straight forward example of the problem/solution.

[ via Zedia Flash Blog ]