Thank you!
As you guys described it should work, but if PS does not save transparency with stock settings in a TGA file it's kinda impossible!!

)
That was also the problem I was facing.
Here's a link for anyone with the same problem in PS to save transparency in a TGA file.
http://tutorials.robbiegee.com/ps_tga.htm
Edit -
Also a nice video on youtube that explains on how to do this.
http://www.youtube.com/watch?v=FjkYaMZGAeU
You don't necessarily need to open a file, you can also create a new file and use this way to set transparency in the TGA.
Maybe that was very newbie-related but this had me going for a few days.
Another small addition. When you place a plane on the exact same position on a polygon from a wall you can encounter textures fading and glitching. You could fix this by moving it as little as 0.1 from the wall, creating a very itty bitty tiny gap between the wall and the plane. But my guess is there should be an easier way to get this done?
I've tried every option in the set transparency command.
2,4,6 seem to give the best result.