I really need to make this work. Maybe it's a general rendering bug, should I move back to processing 1.5?

short update:

I doubt whether going back to 1.5.1 would work - but it is simple enough to try yourself.

The fact that it works when you disable the depth test seems to indicate that the textures created include the alpha value.

There are other hints you might use for instance you might try (I don't know if it works but easy to test)

1. hint(DISABLE_DEPTH_TEST);
2. hint(ENABLE_DEPTH_SORTT);
3.       //draw images
4. hint(DISABLE_DEPTH_SORT);
5. hint(ENABLE_DEPTH_TEST);

Processsing supports other hints you might try I have copied them from the source code

1.   // hints - hint values are positive for the alternate version,
2.   // negative of the same value returns to the normal/default state
3.   static final int ENABLE_NATIVE_FONTS        =  1;
4.   static final int DISABLE_NATIVE_FONTS       = -1;
5.   static final int DISABLE_DEPTH_TEST         =  2;
6.   static final int ENABLE_DEPTH_TEST          = -2;
7.   static final int ENABLE_DEPTH_SORT          =  3;
8.   static final int DISABLE_DEPTH_SORT         = -3;
9.   static final int DISABLE_OPENGL_ERRORS      =  4;
10.   static final int ENABLE_OPENGL_ERRORS       = -4;
11.   static final int DISABLE_DEPTH_MASK         =  5;
12.   static final int ENABLE_DEPTH_MASK          = -5;
13.   static final int ENABLE_ACCURATE_2D         =  6;
14.   static final int DISABLE_ACCURATE_2D        = -6;
15.   static final int ENABLE_STROKE_PERSPECTIVE  =  7;
16.   static final int DISABLE_STROKE_PERSPECTIVE = -7;
17.   static final int DISABLE_TEXTURE_MIPMAPS    =  8;
18.   static final int ENABLE_TEXTURE_MIPMAPS     = -8;
19.   static final int ENABLE_STROKE_PURE         =  9;
20.   static final int DISABLE_STROKE_PURE        = -9;
21.   static final int HINT_COUNT                 = 10;

After playing around with different hint settings I still haven't found anything yet that solves the problem.