Hi! A little .blend that uses raycasts to decrease object color alpha of obstacles beetween camera and player:
http://www.mediafire.com/download/4t5qy68w94rqdtg/obstacleTransparency.blend (don’t download this)
EDIT: V2: http://www.mediafire.com/download/pbi6sp7mv7ejzy7/obstacleTransparencyV2.blend
(obstacles need to have an “obstacle” property and you have to check object color and transparency in the obstacles material tab)