Taxiway edges

Newb here. I'm designing a series of ground polys for use in a small GA airport and I've been following the "High Resolution Airport Base and Taxiway" tutorial in which you use gaussian blur to create a transition area between the taxiway texture and the surrounding grass.

Problem: I use photoshop elements since I can't afford the real deal, so I've been creating alphas by exporting the corresponding alpha .bmp to dxtbmp and adding the channel that way. I'm having trouble figuring out how to make an alpha channel that will give the proper faded look to the black gaussian blur area around the taxiway texture.

Any suggestions on how to get the proper alpha into the .bmp? The tutorial doesn't specify and almost seems to suggest that you can just export the blur over a transparent .bmp background from photoshop and it would appear transparent in fs9. I'm pretty sure that's not how it works, right?

Thanks in advance for your collective wisdom!