I think you can if you add specular map to the object's material's texture and set the object's alpha to 0.
Edit: I don't think it will work as setting object's alpha also affects the material.
After checking out the source, he/she didn't use any custom objects or shaders. He/she is using CLEO to do that so it's either a particle effect or an object which already exist on the game. I think the latter.
This looks fine to me. Player is roughly 2units high, so your code would work fine. If your objects gets created underground then the model's pivot point is higher than you'd expect it to be. Even if the player is crouching his position is still at the same spot, this is also the reason why you can't crouch underneath other environment models (it's not just collision that's causing you not being able to crouch underneath objects). Your code is fine, but like DNL291 said, you can use getGroundPosition to get accurate ground position or processLineOfSight.
Thanks for your input. I'm using custom skin models which I've created on Maya and find out the problem that the origin point starts from the head rather than the center. Thanks!
Sure, here you go.
createObject(2060, transform[1], transform[2], transform[3] - 0.875)
The transform table stores player's x, y and z position.
Edit: There should be a way to get the ground's position the player (or certain entity) is upon.