There is a tutorial on this site for putting weather effects into maps. Both rain and snow are there.
To get the XCC String Editor just download XCC Utilities. Then after unzipping run XCC Mixer and then go to Launch->XCC String Table Editor->Open and open your generals.csf file from there. (You have to extract it from EnglishZH.big first though, unlike with vanilla Generals)
PSP can't do Alpha channels AFAIK.
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