Realistic flames/smoke...anyone done them?

I am in the process of designing my new Flash based website and wanted to have some fire and smoke in the certain parts. They will be important to the mood of certain scenes and I was wondering what the best way might be for doing it. The site interface and design will be traditionally painted and scanned in, then the animated elements (like the flames, smoke, magic effects) will be put on top of that. I could hand animate frames for the smoke and flames but I don’t know how to make the edges partially transparent as smoke would be. Any help is much appreciated.

Here is a QUICK color mockup of the main page of the site. This is just the sketch of the main page scanned in and colored very quickly in Photoshop:

LittleFenris.com v.01

Each of those buildings/sites will also be a button to take you to each of the gallery sections. This will be a portfolio site for my illustration and design work. When you click on either the buttons on the bottom, or the corresponding buttons it will take you to a closeup or interior scene of that building and that is where the campfire/torch light will be needed.