First, be informed that JPG files do not support any kind of "transparency".
You can do what you want with the all around graphics manipulation application GraphicConverter:
http://lemkesoft.de/
What you would need to do is use the menu "Picture>Levels". Adjust the sliders to the level of contrast you like. Alternatively you can use the "Brightness/Contrast" dialog, depending in what you mean by "fading".
Now, with the toolbox visible, select the pen tool, fourth down on the right. Set a foreground color by doubleclicking the box on the bottom and selecting a color. Set the line to width like 8 pixels in the tiny section just under the tool icons. The selected line width applies to all drawing tools.
Now you can use the pen tool to draw on top of your faded JPG. GraphicConverter is worth purchasing, but works without a registration with all features enabled.