I use a tool called "Bitmap Font Creator" or something to make my fonts, which basically saves all the characters over a magenta background and outputs a PNG, as well as a file with spacing values. It has an option to save the fonts anti-aliased, but my problem is that I have no way of making it so that the magenta that underlaps the anti-aliased character edges literally change from semi-magenta to semi-transparent. Does anyone know where I would look in say, Paintshop or Photoshop to turn anti-aliased characters over a magenta background to anti-aliased characters over an alpha background? That or another tool that functions similar but includes this feature would be nice.

The GIMP has a colour to transparency function, but I am not sure how well it will work with anti-aliased pixels, worth a look maybe.