DXT1, no chance for DXT3

I've been redoing a Gmax aircraft file I retrieved off the net, which came with the finished product of the aircraft. Unfortunately, the aircraft wasn't alpha-channel compatible (did the "ghosting" thing), wo I thought I would recompile it and see if I could get it to work. No such luck. I recompiled using my Gmax setup (checked "has reflectmap" in MakeMDL) but it still refuses to accept ANY alpha mapping (DXT3, 32-bit). Stuck with DXT1. 
Could someone please remind me of the reason for this? I know I've read it on here before, but I just don't know what to search for to find the relavent information.

Could someone please remind me of the reason for this? I know I've read it on here before, but I just don't know what to search for to find the relavent information.