what resolutions do we need, which color stands for alpha, what filetype does it have to be, how do i assign it to the mod. What size do they have to be? Also how do you add them?

I do 64x64 dtx1 compression (makes it ~3kB) using the Gimp.

Whatever this gives:
Layer-> Transparency -> Add Alpha Channel

In xml/technologies/civ4techinfos.xml, just edit the BUTTON line:
<Button>,Art/Interface/Buttons/rfre/EarlyRepLegio_large.dds,Art/Interface/Buttons/rfre/EarlyRepLegio_large.dds,0,0</Button>

It can support an array if you jam them all into the same file, but I don't use one so mine are 0,0.

Thankyou Primordial Stew :)