Yes. I have tried that but the string gets drawn with the opacity setting
of the menu.

Here is some sample code I have written with a ToolStripRenderer.
It works fine but it seems the menu is also drawing a gray background
behind the transparent background colors that I am drawing. I wonder if
it's possible to prevent the drawing of the gray background.

private void cmdTestScenario_Click(object sender, EventArgs e)
       {
           System.Windows.Forms.ContextMenuStrip cm = new
ContextMenuStrip();
           cm.Renderer = new MyRenderer();
           cm.ShowCheckMargin = false;
           cm.ShowImageMargin = false;

           cm.Items.Add(new ToolStripLabel("Label"));
           ToolStripItem it = null;
           it = cm.Items.Add("Item1");
           it.BackColor = Color.Transparent;

           cm.Items.Add("Item2");

           cm.Show();
       }

       private class MyRenderer : ToolStripRenderer
       {
           protected override void
OnRenderToolStripBackground(ToolStripRenderEventArgs e)
           {
               //draw background with transparent white
               Color bgColor = Color.FromArgb(100,Color.Yellow);
               Brush b = new SolidBrush(bgColor);

               e.Graphics.FillRectangle(b, e.AffectedBounds);

               base.OnRenderToolStripBackground(e);
           }

           protected override void
OnRenderItemBackground(ToolStripItemRenderEventArgs e)
           {
                 base.OnRenderItemBackground(e);
           }

           protected override void
OnRenderMenuItemBackground(ToolStripItemRenderEventArgs e)
           {
               //draw background with transparent white
               Color bgColor = Color.FromArgb(100, Color.LightBlue);
               Brush b = new SolidBrush(bgColor);

               e.Graphics.FillRectangle(b, e.Item.ContentRectangle);

               base.OnRenderMenuItemBackground(e);
           }

           protected override void
OnRenderItemText(ToolStripItemTextRenderEventArgs e)
           {
               //draw with solid red
               Color bgColor = Color.Red;
               Brush b = new SolidBrush(bgColor);

               e.Graphics.DrawString(e.Text,e.TextFont,b,e.TextRectangle);
               
               base.OnRenderItemText(e);
           }