transparency & zbuffer

see alpha testing
Cause I'm a good mood I'm gonna tell you (just seen Yann L is about to write articles :) )
glAplhaFunc( GL_EQUAL, 1.0f );

They are prolly using both alpha testing (glAlphaFunc) and alpha blending (glBlendFunc), that's how we do it most of the time.
Alpha test discard fragments under treshold (0.2-0.5), and alpha blending makes sure your edge blend softly with the background.

Not sure about not interpolating A... with the tech above you don't care.

You can't interpolate RGB and A separately, unless you setup RGB into a texture and A into another texture and give different parameters into each texture. (requires multitexturing BTW).
Anyway that's not what you want.
The thing you want is using alpha testing WITHOUT blending.
Call something like glAlphaFunc(GL_GREATER, 0.5f) and glEnable(GL_ALPHA_TEST) and you'll see almost the same effect that your game provided. (feel free to change the 0.5 threshold at wish, that's just an example).

The big advantage with this method is that you get order-independant transparency (pretty obvious, since there's no blending) and you get soft edges, but then you get the problem Ingenu pointed : minified textures won't look very nice. You can still mipmap the textures to reduce this bad effect though.

There is a thread here where we debated on this subject (look after the last 10 or so posts)

glEnable(GL_ALPHA_TEST);
glAplhaFunc(GL_EQUAL, 1.0f);