Trouble with belnd mode alpha on right side

I have a png that I place in the library and access via ActionScript. The png has transparency around it (eventually it will be a 3D rendered still, not just a box, so I can’t simply crop the image to remove the transparency).

I have included a simple example fla in the zip. (w,a,s,d,x to add circles) In this I give the bitmap a blend mode of “layer”, and then I use the “draw” function to add a circle to the bitmap with a blend mode of “alpha” and it’s transparency set low.

This causes the area that the circle covers to change it’s transparency. I know the color representation won’t be 100% correct, but that is not what my question is about. The effect looks fine except on the right hand side of the bitmap. There it draws an outline of the circle in the transparent section using the same color as the bitmap that I first added. Check out the attached image.

Has anyone else come across this, is this a bug? Any ideas on a work around for this? This doesn’t happen when the box is cropped close, but like I said eventually this will not simply be a box.

Thanks for any help.