When using a resource pack that contains an item that has a texture containing pixels that have a transparency of 25 or less, those pixels are not rendered, instead appearing invisible. This is true of items when held in the hand, in GUIs, or as an item or block display entity. This is not true of blocks placed in the world, however.
To reproduce:
Download attached resource pack (transparency_test.zip)
Run the following commands in different locations:
/summon item_display ~ ~ ~ {item:{id:"minecraft:phantom_membrane",Count:1b}}
/summon block_display ~ ~ ~ {block_state:{Name:"minecraft:white_stained_glass"}}Place white stained glass on the ground
Look at a phantom membrane item in your inventory
To make comparisons easier, I suggest looking at these with a dark block behind, like black concrete. The white stained glass block behaves as expected; the entire texture is displayed.
The item display entity, block display entity, and held item (both the phantom membrane and white stained glass) are missing the top part of the gradient, where the transparency level is between 0 and 25.
To make this more apparent, I've drawn a 1x1 diagonal line from the top left to the bottom right of the texture. The part of the texture that is not rendered correctly in some situations (which spans horizontally across the texture) is indicated by the red part of the line. The part of the texture that is rendered correctly is indicated by the green part of the line.
Note: this issue persists between fast, fancy, and fabulous graphics settings.
Can confirm.