It's a difference between animated Material Alpha instead of Geoset Alpha, which is more common.
Similar thing is done for most skeletons/corpses decaying.
It works with a material that is Transparent, and the texture has variable inherent alpha values, so some bits are just like 10% transparanet or soemthing, like along the edges. Then as the material alpha value reduces, more and more parts of the texture image stop being visible at all, because Transparent just has binary visibility, where as Blend has a gradient that looks blurry.
Without looking at your files, I would guess that the texture just has solid colours without alpha elements.
ED: Hope that was helpful, on rereading it's a bit confusing :/
But experimenting with the corpse texture (Gutz.blp?) should help figure it out.