I want to make gnome-terminal transparent. To do this I have to select option Transparent background and move the slider under Background tab from the menu - Edit -> Profile Preferences. It becomes transparent but only the desktop wallpaper is shown in the background.
But I want to see actual open applications or windows on the background. How do I do this? (Preferably in Ubuntu 11.10)
This is not gnome-terminal specific but related to your system. When available, GNOME-terminal uses "X.org composition", which allows real transparency.
In distribution such as Ubuntu, this is done by enabling "Desktop Effects" and usually requires some kind of 3D acceleration.
If you have disabled all desktop effects (and using Unity-2D or GNOME3 fallback), there's no composition available. It means that GNOME-terminal cannot use proper transparency. It then make a fake transparency by getting the wallpaper from your setting and putting it as its own internal background, which might look like some transparency but isn't really one.
Solution: enable desktop effects.
If you are wanting to do this without it taking up all the resources that compiz usually uses, then in the enable desktop effects menu find the individual effects and uncheck all of them but transparency. This doesn't restrict the action to only your terminal, but its alot less intensive than the default settings.
