Well, I believe that the entity has to stay in the same spot (because the decal can't move). Place the decal in the same spot as the entity, and give the decal this script:
:state=0,activated=1:state=1
:state=1:setalphafade=100
:state=1:rundecal=2,state=2
:state=1,random=2:state=2
:state=2:setalphafade=0
Then, add the following line to the code of the entity's destroy script:
activateifused=1
And in the entity's "ifused" spot in the properties, type in the decal's name and you're done!
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