I have tried to create a texture with an internalformat and format of GL_INTENSITY. According to table 3.21 in the 1.3 spec, this should be interpreted as R,G,B,A = I,I,I,I.
Then I set the texture environment mode to GL_MODULATE.
My texture has values of only 0 and 0xFF (I.E. 0.0 and 1.0).
I enable an alpha test to discard fragments with alpha less than 0.5.
I attempt to textured quads with this state but I only get solid blocks, instead of see-through portions. With a texture format of LUMINANCE_ALPHA, this combination works as expected.