Its been over 2 years ago since I put this Idea in, and I was hoping by now this would be implemented by now, so Im bringing this up again. It would save huge amounts of time to be able to overlap two clips which creates a auto Transition effect
To be honest, it's not a bad idea. It's a Sony Vegas way of editing video is it not?
Camtasia doesn't process transitions that way. I don't see how they accomplish that without reinventing Camtasia/Transitions down to there core. So, good luck with that. I'm still waiting for a basic Outline Stroke to be available for text.
I'm sure you realize you can add fade to each overlapped clip and trim them to length yourself.
I think this is already possible. You'd have to place the two pieces of media next to each other on the same track and have a fade transition at the end of first media and beginning of the second media. In that way it will fade from media 1 to media 2. This doesn't work if they are on separate tracks. Here's a quick demo. Let us know if this gets you what you are looking for.