Hi Mark,
Morph is designed to take the paths from your initial SVG image and morph them into the paths set on your second SVG image - this doesn't take transparency into account, only the shapes of your images.
There currently isn't an option to fade images in/out but this is an open feature request and will be reviewed by our development team.
I can't advise on specifics with using Flash, but do let us know if you find anything useful!
Mark Donovan
Also, is there a way to use the motion hints that are in Flash to smooth out morphing in VS?
-Mark.