we did it in Aspect Arcade (some of the particles fade out). imo it's really more of a grading risk than anything, as you're being graded on Bitness -- in other words how 1bit your game is -- so in a sense it's up to your fellow competitors if they accept alpha values as allowed. Bitness is ultimately just 1 of the scoring categories.
but, to more directly answer your question, alpha manipulation would break the "1 bit" rule.