Run xeyes. It should not get a border as its a shaped window. twm gives it a title bar. kwm doesn't give it any decorations. i think the title bar only approach is better.
There is no rule that says that shaped window shouldn't have decorations.
Fixed in CVS, both branches. You can grab a copy here : http://www.xfce.org/archive/test/xfwm4-4.0.5-cvs.tar.gz I took the option to not decorate shaped, as some KDE apps expect this behaviour. Shaped windows can still be moved/resized using the Alt+click shortcut. Thanks for poiting this out. Olivier.
mass stale bug cleanup - reopen if closed in error