AppleWorks doesn't handle transparency well, even using formats such as .gif or .png saved with transparent backgrounds in another application. However, a few years ago I accidentally discovered that if an object is flipped or rotated in AppleWorks, the background will become transparent. The object doesn't even have to be .gif or .png & have transparency.
Once I discovered this, I used
GraphicConverter to flip an image horizontally & save it as a PICT. Then I insert the object in my AppleWorks document & flip it back. I use PICT because it is the only graphic format that will retain the native resolution. All other graphic formats are changed to 72 dpi by AppleWorks.
Unfortunately, the last few times I tried this, it no longer worked. For myself, I use Pages for this kind of work now. I handles transparency very well.
