I was looking for a centralized list of all of the parameters for .txis and what they do, but I wasn't able to locate anything. Here's what I've discovered so far, looking through various KOTOR files.
blending
Various blending options using the alpha channels of the .tga. (Think Photoshop blending options.)
blending additive
Used for translucency.
Equivalent to Add or Linear Dodge, the color is added to whatever is underneath.
blending punchthrough
Used for transparency.
e.g. grass