In this screenshot I'm standing by cut-outs displaying my clothing.
Step 1: Force Daylight So You Can See.
Step 2: Make a Prim to Pose on That Is a Contrasting Color.
Step 3: Use "full Bright" on the Texture Tab in Build.
Step 4: Pose and Take a Snapshot.
Step 5: Run to Photoshop.
Step 6: Open Your Snapshot.
In the background layer under your image, place a color that blends in with your image color.
In the image layer, use the magic wand to select the plain color that surrounds your cut-out-to-be.
Step 7: Make an Alpha Channel.
Now you have an alpha channel.
Step 8: Here's Your Alpha Channel.
Step 9: Resize Your Image.
Save your image as a Targa, with a depth of 32 (for the transparency).
Your image proportions will be restored when you put it on a prim. DON'T WORRY ABOUT THAT NOW.
(Note: Targas with NO transparency MUST be 24 bits, not 32!)
Step 10: Run Back to Second Life.
Step 11: This Is Important.
Stretch it to approximately the size you want.
TEXTURE IT ENTIRELY TRANSPARENT.
If you lose it you can "Highlight Transparent" to find it again.
DON'T ARGUE WITH ME. If you don't - eewwwww it will be UGWEE!! The edges will show and I won't have any sympathy for you.
Step 12: Choose the Radio Button "select Texture," in Build.
See the circle? That means you are texturing one face.
Browse for your cut-out texture and apply it. Do the same for the other side. You can flip the texture if you want the cut-out to face the same way on both sides.
Step 13: Tweak It.
Sell contents makes a nice folder in the buyer's inventory.
When you see something for sale you can look in the contents tab in Build to see what you would be getting.
Any questions? No? YAY!