<- @ 11:30. Transparency non flicker. The sprites on the top transition line flicker (alternate - ala Sonic water levels) - but you can't see it in that video. But everything below the translation line isn't flicker transparency.
What is also cool about that particular scene, is that the "transparency" section also has a wavy "TFIII" effect. Something that wouldn't be possible by simply turning on a SNES transparency layer. If something similar was done in a SNES game with a transparency, the transparent layer could make use of a wavy effect itself, if it had patterned art to register the effect. But it wouldn't be the same.
SNES has three modes of transparency AFAIK; BG layer and color window. The color window is the simplest, but you can change the color math and base color with an HMDA (basically an Hsync interrupt) to make it fade down the screen. You can still do warp or do other effects to the BG underneath it but that would take additional HDMA channels to do that (each channel can write a byte to a PPU register per scanline. There are 8 HDMA channels). The Sprite have some attribute attached to some of the subpalettes to 'pop' a sprite out of the color math window or such areah so it doesn't get the effect. The BG layer mode, which I don't remember much about - is basically a translucent background layer over top the other BG and sprite layer. I don't think it's restricted to the 3 BG layer modes (as in just the 2bit BG layer can be assigned that function), but I'd have to recheck that. I'm also not sure if you can use color window and translucent BG mode at the same time, as I don't remember any games doing that.
PCE can kind of simulate the color window mode of the SNES. Though it's through subpalette and precalculated colors, but the effect is automatic to the screen area. CCovell's Axelay demo changes the BG color #0, but he could have duplicated the original repeating city tiles map over a larger tilemap and used the hsync interrupt to show the map in different color gradient (the all the tiles on that scanline as translucent, not just the BG color #0) going down the screen. On both VDCs too. That would have looked very SNESish.
