One easy way to do this is to put a fallof map into the opacity slot of a standard material and perhaps put the same map into the self illumination slot.
Thanks John getting there, but what do you guys use for the other settings? what type of falloff, where does one give the color to the material, where does one give it the light intensety???
No Problem. for Falloff I tend to use Perpendicular / parallel which is the default and then use the mix curve in the falloff parameters to control the blending between transparent and opaque. You can use the main diffuse swatch to control the colour.