Not huge (since the foobar doesn't even let you change color anyway :/
but it would be really nice.

Sort of disagree. Not a huge deal for gnome2 since this applet will
most likely not see much use in that release. However it is definately
a problem for 2.2, if we ditch the menu panel, since all other panels
can change the background to a different color or pixmap. It would
look real bad if it didn't work.

moving this bug to the panel, since the new panel menu (like all other
applets) has the same bug. 

Hmmm - I have no idea how you would guarantee that the text would be
readable

You can't. I see a couple of solutions:

1. Declare this and all other applet bugs about applets not being
transparent to the panel background color WONTFIX.

2. Not guarantee that text is visible, if the user chooses a dumb
color or background its their fault. (I assume this is the most
palletable option).

3. remove the ability to change the background color of the panel (no
other widget in the whole gnome ui with the exception of the desktop
background, lets you change it color scheme).

I favor 3, but once again i'm sure the masses would rise up and slay
us for we choose such an option. 1 seems reasonable, but sort of
raises the question what is the purpose of being able to set the
background of the panel (or make it transparent) if all the applets
don't recognize the panel background (ie. are grey etc.). 

Right, marking WONTFIX. It doesn't apply to all applets though, but I
supect it applies to most of them