I had the same question as the OP, so yay for your answer, which worked like a charm when I tried it on a couple of random clips in a new file, but now that I'm trying it in my actual video, every time I click on lighten with the just the track highlighted that I want to be the transparent overlay, it "lightens" my entire timeline so that nothing actually changes and my overlay remains opaque. Any idea what I've done wrong?

I hate learning new software, sometimes. *headdesk*