Well I got it finally !!
So I want to append the steps that I did with compiz so it helps others and myself in future too.
So I did the following.
1. System > Preferences > Appearance > Visual Effects
Choose "Normal"
2. System > Preferences > CompizConfig System Manager
Go to Opacity, Brightness and Saturation plug-in
Go to Opacity and 'add' the follwing in Windows :
Tooltip | Menu | PopupMenu | DropdownMenu
And choose some no. , e.g. 85 as Window Values
3. Activate the plug-in
4. If this doesn't still work, you may need to activate some other plug-ins.
I'm not sure coz some plug-ins were activated from the beginning in my system.
Thus you can make any terminal or any other window as transparent as you want by slowly scrolling down the mouse scroll
button by press+holding the Alt-key.
5. Now the dynamic part! You still may see the Desktop Wallpaper behind your transparent terminal/window even though you are running a movie on the background (by using xwinwrap or rootwin command). So you need to do a trick. You choose a solid color, preferably a dark color, e.g. black as your Desktop wallpaper (since normal distribution may not have a blank wallpaper.). So this dark will serev like a thin shade over the running movie on the background. You can re-adjust that by changing contrast/brigthness within the mplayer.
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The transparent effect can be also done by simply modifying the treminal/konsole profile. And you can follow the same trick to see movie in the background as a well. However, you won't get that much flexibility and control that compiz compiz produces.
Thanks to truboy for giving me the idea of "compiz".
Enjoy !!