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I don't believe there is a way to output a video from Premiere Elements with an "alpha" channel (transparency) intact. I believe, as you've found, when you render, the empty areas become black.
In fact, I'm not sure any program -- except maybe Flash -- will give you the effect you're looking for. (GIFs can, of course, maintain transparency in their animation. But it would be a real bear to animate what you want, frame by frame.)
So why not compose the whole thing -- the guy and the banner -- in Premiere Elements and output that as one video file? It's certainly a lot easier than doing two separate elements and trying to get a transparent thing going between them.
Well, I do believe After Effects would do this (I've seen tutorials on that), but I don't have that program. Creating the whole thing in PE would work OK for the banner (though I'll have to see how the quality v. filesize works out), but not for the guy walking out over the website...
Hey Steve - I shelved this back in July, but now I've revisted it, I've found that in fact, PE4 can do exactly this!
Basically, after you've applied the green screen or chromakey effect to your satisfaction, you export the move as a quicktime - the trick is to choose "millions+ colors" in the video settings.
This setting (as appose to "millions of colors") retains the alpha channel in the .mov (even though you still see the green screen) if you play the quicktime.
You can then use the Flash Video Encoder to convert the quicktime into a .flv - again making sure you check the "alpha channel" box in the settings.
Finally, when you import the .flv into Flash, the green screen is gone. No need for After Effects after all - problem solved :-)
The detailed instructions can be found here:
Just to try and help out anyone who might have this problem in the future, I'm adding the words Talking Heads to this thread - I guess that's a term use for this kind of movie.
Thanks for reporting back with this solution Chris, I'm sure it will be of use to others. Must post this over at Muvipix too :)