Using WebKit Nightly Build r33943 (built on May 20th, 2008) on Mac OS X 10.5.2.
Please see test case URL supplied. I applied a border-image to a DIV using -webkit-border-image, -khtml-border-image, and border-image (which isn't supported yet as far as I can tell). The PNG used for the border image has an alpha transparency (http://synaptictransmission.org/tests/img/border-image.png) which is rendered as white.
Behavior expected: PNG should retain alpha transparency.
Unable to test on other platforms.
Created attachment 21262 [details]
Requires attached PNG files
Created attachment 21263 [details]
PNG file for HTML/CSS Reduction
Created attachment 21264 [details]
Optional Background PNG for HTML/CSS Reduction
The alpha channel in the image *is* being respected. The white that you're seeing is the background color of the div as specified in the CSS:
Removing this line gives the expected result.