Quote: "if I remember correctly by default any pitch black areas in a sprite are by default transparent. "
correct, unless you turn transparency off, or set the transparency to a different color.
Quote: "Just split it up into 3. The top part and bottom part as normal and the middle would realistically have to be a sprite"
You can alternately make one image changing all parts you want transparent to black, and then when you paste the image to the screen you can use the optional transparency flag.
they will never know what bit them until its too late...