Ahh yes, the transparency problem, A7 solves this with the new my.overlay flag. It works great, I make good use of it already for my terrain shaders. If your using the beta you can try it out. This will fix alpha problems between the entity and other entities, but not necessarily within the entity itself. The lines you posted might also work.
If your having problems where is seems like your normals flipped, make sure that your first texture for your entity(the non-normalmap) has no alpha map. I think the reason for this lies in the second pass where the lighting requires the blending/alpha transparency. If it has an alpha map then its almost like all the normals of the model flips. Mabye this is a shader problem? Or it might just be how it goes. I know when you make vegetation and the such you cannot have alpha transparency or the normals do the same thing. If you do put an alpha map for the first model, and turn off alphaBlendEnable for the second pass, then the lights do not show for that pass, but the normals do not flip.
