your game looks pretty cool. nice work
edit: The transparent shadow effect comes from the blurry brush in photoshop, it just leaves some pixels undeleted leaving a combination of the image and the background when viewed.
you can get the same effect by zooming in and manually deleting pixels, however this would be time consuming.
for the blinking firelight,
you could try making an animated sprite for your mask layer.
create a png with a grid (say for example 5 x 5) in each square place your transparent light shape, even change the outline a bit to get a flickering edge for the shadows and light.
In another layer add the colors for your glowing effect over the frames to create an animation sequence and set the color layer to be semi transparent. save as a png.
ive added an image to give you the idea, however this example pixture looks pretty crap when its animated, I just made it to visually express the idea.
hope this helps
kezzla
Sometimes I like to use words out of contents