The green thing AFAIK only works with D3D, and invisible means you can shoot through it but can't fly through it. Which means a cockpit wouldn't look right unless you had faces underneath/behind the invisible face that point outward. On a face by face basis, you can make a face invisible in all modes by giving it the texture "invisible" which is easily done by ModelView32/PCS. (Take a look at the Orion for an example.) I believe the bright green (0,255,0) = transparent thing is a "feature" built into D3D and not something FS2 itself does on purpose. And remember, under Glide and probably OpenGL that green will show up as green.
Edit: Glass type "windows" wouldn't look right without some sort of reflection thing, and these transparancy methods don't fit the bill.