Ok, for the brave ones who want to attempt it, I've attached a zip that contains a new shader, and a sample character that uses the "burnout" effect after he dies.
1. The diffuse texture needs an alpha channel to use as a "cutout" that does the dissolve/burnout effect. Use this one or experiment with your own.
2. To preview effect, load your character, shader, and textures into Dark Shader. I've built in a slider called "BurnoutPreview" that you can use to preview the effect without using FPS Creator.
3. There is also a sample character included in a folder called "character burnout" that you can use to see the effect in FPS Creator. The key is in the appear and destroy scripts. Shader variable 2 controls the burnout effect. There's not much to it - just a few lines to set up the shader variable in the appear script, then a few more lines to alter that variable in the destroy script- hopefully you can copy and paste to customize your scripts to taste.
SPECS: Windows7 x64, Intel Core i7 920, Geforce GTX 580, 6GB RAM