Nice program rainrider, I have some suggestions:
1. An option to choose shorter transitions (64 or 32 pixels high).
For example, the lower half of malaga.bmp and the upper half of kokos.bmp make this:
[IMAGE] which can result in something like this:
[IMAGE]
2. 'Masking': using a 3rd image to control the type of transition.
I made this 'mask' out of a 3rd texture:
[IMAGE]
and this is the result:
[IMAGE]
Also I want to point out that it works best to use textures with dimensions of powers of two, otherwise the texture gets stretched by directx and doesn't look as good.
Keep up the good work :)