To display transparent symbology in your WebOffice 10 R3 projects several configuration steps have to be done. First set the transparency on your ArcMap layer.

Display settings in ArcMap layer properties dialog
Providing full transparency support is depending on the image file format first. ArcGIS Server is able to provide map service images in five different image formats: JPG, GIF and PNG in 8, 24 and 32 Bit depth. Proper support of the alpha channel (responsible for transparency) is only given using PNG 32. So the next step is to set the image format of the map service containing the transparent layer to PNG 32. Setting can be done in the map collection using the map service properties.
Note: There is no need to change the image format of the map service if you want to use it in a MSD/MXD hybrid scenario.

Image format setting in map service properties
Using MXD-based map services, image generation quality and anti-aliasing level is lower than using MSD-based map services. To provide MSD-based map service images with high quality and also use the functionality of a MXD-based map service, you need to define a MSD/MXD hybrid configuration:
•Save your MXD as <my_mxd>_MSD

Save as
•Publish the map using the map service publishing toolbar

Publish MSD Service
•Add the published MSD-based map service to your map collection as an ArcGIS Server Internet Map Service

Add MSD Service to map collection
•Set the image format of the ArcGIS Server Internal Map Service to PNG32

MSD map service properties
•Relate your MXD based map service to the MSD based map service

MSD/MXD hybrid configuration

Quality differences using different image formats
Be aware that image format PNG32 has many advantages in display, but images are very large in size. This may lead to performance problems, especially in internet projects and networks with a low bit rate. To get an impression of image sizes compare different image formats using the Map copy tool. Review the image size using the properties dialog of the Map copy IFrame window.

Comparison of client side image sizes
Note that map service properties only take effect, if only layers from the affected map service are visible. If layers from different map services are merged on client side, the Image Blending settings from the application configuration take effect!