I put a bit too many bells and whistles in there (like the sword acting as a lens...), but the trick that seemed to work the best was to was to make both the darkest and lightest features of the sword opaque. Fiddle with the intensity curves until you've mapped the darkest and lightest regions to white, then use that as a mask for the transparency of the original sword. Most of the sword will be transparent, but you also wind up with nice glossy reflections...