Jpeg images(.jpg) doesn't really support or work with transparency that I believe you're looking for?
What you need to do is to make the images use something like .png format, make sure it has transparency before saving it, and then adding a code in the material file for alpha rejection.
Try some thing like:
alpha_rejection greater_equal 128
By adding it into the code like this:
material BlueStar
{
technique
{
pass
{
ambient 0.588235 0.588235 0.588235 1
diffuse 0.588235 0.588235 0.588235 1
specular 0 0 0 10 0
alpha_rejection greater_equal 128
texture_unit
{
texture BStar.png
}
}
}
}
Now I usually don't diddle around with materials, but I believe it's what you're missing since grass and other stuff use this too. You might need to modify the value of the alpha rejection to suit your needs however, and make sure the source image actually has transparency in it.