I have my gnome panel configured to be transparent. All of the buttons and applets I have show up nicely, with a transparent background. All except the VM applet. I checked and the PNG images from the sources do have an alpha channel, and render with a nice transparent background in any image editor, so they're not to blame. I looked quickly at the code, and I think that's where the problem lies... (vm_icon_update() from applet.c). I can't figure out how to fix the problem, but having looked at other applets (the "brightness" and "inhibit" from gnome-power-manager), it looks like the vm_applet uses some older and more complicated way to display itself. It seems to me that is should be fairly easy to update the code and fix the transparency issue at the same time, though I could be wrong.
Using panel_applet_set_background_widget() would probably fix this
This bug appears to have been reported against 'rawhide' during the Fedora 11 development cycle. Changing version to '11'. More information and reason for this action is here: http://fedoraproject.org/wiki/BugZappers/HouseKeeping
I've just noticed that this is a dead package now, with the note "Dead upstream, largely obsoleted by virt-manager 0.8.0.", so closing. In addition, I've just looked at the virt-manager sources, and the pixmaps seem to have SVG originals and transparent background PNGs.