Although being able to create transparent layers, I feel that creating an AVI in a video editing application will invariably create an end file which
isn't transparent. In effect, the transparency is an internal effect used in the editing process. I may be wrong on this.
Unfortunately I have not considered before the possibilty of creating mutiple subtittle tracks, but agree that re-encoding your video with several diiferent tracks is a waste of resources (and certainly isn't done in DVDs!).
An initial google search resulted in the following links:
http://www.titlefactory.com/ http://www.fab-online.com/subtitling/ http://www.divx-digest.com/software/..._workshop.html
I think the last one is the most promising. I also feel this suggests my initial thoughts may be correct.