I've noticed that even with white images, they still print a huge square block on the shirt before doing the overlay of the black

I was hoping to avoid this by sending them transparent PNGs, but that's probably just wishful thinking. I'll bet they have the t-shirts pre-silkscreened with the white blocks so that they can do the printing directly onto them. Either that or it's some kind of a system with an iron-on transfer. Dunno, their web site is kinda cagey about explaining the system clearly.