Unless you have the Enhanced Preview extention loaded, the on screen view will look like mince. Quark uses a lo-resolution placement only image for previewing.
Instead of saving as a pdf, save the file as a high resolution tif file.
Is there any reason for you needing the alpha channel?
If you want a feathered edge to the image so that it fades into the page background, do that in Photoshop. IE, apply the mask.
You can use Quark to text wrap to the border of the feather.
Try this link for the Enhance Preview XT-SE (Freebie) and see if it is still available.
www.koyosha.com.
Carry on driving us to drink, you're on the bell anyway! [bustagut]
Al.