In creating a palette for unique characters, I noticed that the emoji characters have transparent edges which fail to mask the background behind the palette. Symbol-type characters (e.g. arrow symbols) work properly.
Oddly enough, the emojis appear correct in the palette theme editor. 
(My palette theme is set to 0% transparency and no icon. Each symbol/emoji is part of its macro name.))
Why do you not just set them as icon? There is even a handy tool in Keyboard Maestro for exactly this. Just double click on the icon on the left of the name, choose Character tab and add the emoji and set the background opacity to 0%.
I tried that but did not like the inconsistent results with symbols and emojis. The icons are also smaller than their text versions.
The character picker for making icons displays the emojis at a size too small for my eyes to distinguish features. I could not find the thinking face. Since not all of the emojis are listed, e.g. flags, their text version is needed.
When my OCD finally gets to me, I will make the dozen or so icons in a graphics editor and paste them in.
There is an option to adjust the size and position of it. Just next to the character picker
I knew about adjusting the position. Thank you for the tip for resizing the character.
I tried to duplicate this and could not.
If I create a palette with no icons and emoji in their titles, the emoji display as expected with no unexpected bleed through to the window below.
Peter, I can confirm the behavior @Cowpi is reporting, running Keyboard Maestro 8.2.4 on macOS 10.14.5.
The emoji have a transparent background which cuts through to the underlying screen, rather than to the palette background.
For, example, here's the palette on a black background:
and on a white with black text background:
The expected behavior is for the emoji transparent areas to show the blue (in this case) palette background.
Never mind, it looks like I accidentally fixed it for 9.0 already.
You should have more "accidents" like that. 
