I've got my VWM background transparent but it took some experimenting (and I'm not sure that this would work docked into an xLabel or not). I've got a 1-pixel magic pink image tiled as VWMBackBMP, and VWMUseFakeTrans is set. If I turn off the fake transparency it just shows a pink background, and I don't recall why I don't have it draw the background with VWMBackColor, but it works so I'm satisfied.

I guess RabidCow would be the one to give you a definitive answer on this one.