Installed the latest RC yesterday-May 7 09, and now sword doesn't turn transparent when sheathed. You have to take it off and put it back on. Don't know if this is a bug or not really, but thought I'd mention it. Cheers.
I've been reading about a bunch of really odd stuff in the new RC, as well as the new server code. I don't think I'm likely to be super pleased with SL in the near future, haha.
I don't see a fix for this issue on the list of bug fixes, so I have to admit I'm a little disappointed, but I also haven't tried it to see if it's just not on the list.