I believe the particular material you need to change is called "head skin" or something like that. "lips" is just for the lips. Don't mess with the transparency. Mike's beard doesn't use it. The texture at the bottom left of the materials window (just above the bump map) is the only thing you need to change. Just select head skin and change the texture. After that you might like to put the same texture into the other head materials: eybrows, eyelashes etc.

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