For fades I like to use a sprite, usually less than 32 pixels. I put the fade across it, and stretch it to fill the screen, and the blur added to it blends all the colors for me. (the ground in my Chicks game is 1x20)
I try not to do that with transparency though, as when played on mobile, it can only handle drawing 3 screen worth before taking performance hits. Meaning areas seen through a sprite are using twice that screen area to draw. And too much overlap can reach that limit pretty fast.