Looking promising- been watching your progress. The white matte lines or fringing that you're getting is a issue with the lack of overpainting.
Instead of reinventing the wheel, take a look at the following url:
Notice how they flood the color image with a similar color to the element even though the alpha is only made for the element itself. You could do it this way or erode your alpha a few pixels in so there is color information in matte line area.
Hope this makes sense.