Alpha treshold will remap the alpha contained in the source.
Think of it as a smooth threshold. Start indicates the start of the new alpha ramp and End indicates its end.
If Start is bigger than End, alpha will be inverted (hint!)
If Start is equal to End, alpha will be a hard threshold.
In this example cap, the little plane controls the start with vertical motion (bottom is 0) and end with horizontal motion (left is 0). Made with .994b, sorry. It's an easy effect though.
Source texture is an image that has equal colors and alpha channel, so it's easy to see how it works.
EDIT: tried to include exe, surpasses max size
EDIT2: Now with .98 .cap goodness.