You can make part transparent by painting gray tones in the alpha channel. Black is invisible, white is visible, gray tones are in between.
You can edit the textures using Photoshop CC, PAINT.net(just erase directly on texture for the program), or other DDS friendly editing software.
As far as dying the armor I do not know, Black Fire had an explanation on how its done, but I have never tried it. I prefer painting the textures directly. The only drawback to that is everyone is wearing same color as you if they have default undyed armor.