Select the part of your legs you want using the polygon tool, and then "right click" cut to new layer, and then use the opacity option on layer...it's not the best way, but certainly the quickest.
If you want to email me the pic, I'll do it for you and write a quick tutorial and repost here.
Take your layer of your costume, use the box select and set the dither to 10-50 depending on how much fade you want, draw a box near the legs and hit delete.
Thats indeed the fasted way
Not the best way, as you ruin the layer. The best way is in CS3, you have layer effects that do not modify the original, but its not easy to do