Version: (using KDE 4.2.1) There is nice plasma themes that feature transparency, and on desktop applets that works just fine. However it does not on panels if composition is disabled, which is a big pity for themes like "Air" or "Glassified". If no composition is available, fake-transparency should be used for the panel, the same way it's used for the desktop applets.
It can't be used in the same way its used for applets. Any application can do transparency within itself. (As with plasma applets on the wallpaper) But when you bring other applications in the mix (windows of any application) you have to either use real transparency provided by the graphics card or resort to ugly hacks that don't work too well. It has already been stated that Plasma will not implement hacks for transparency.
Of course it can be done. All that would not work would be showing windows under the panel, and you would not have anti-aliased borders of the panel. But for the panel itself it would work perfectly. The KDE3 way of transparency works fine for a panel. Nobody cares if it's a hack or not! There is simply no technical reason why a panel in non-composition mode has to look significantly different from a panel in non-composition mode.
*** Bug 252951 has been marked as a duplicate of this bug. ***