Does any software have the capability to create a mask/alpha value based on the volume of an audio channel
You could certainly do it in After Effects. If you convert the audio levels to keyframes you can then use expressions / the pickwhip to drive the opacity of the layers. After Effects is not free. I wouldn't be surprised if it was possible in Fusion (freemium) and certainly other compositing tools like Nuke or Apple Motion. Natron, (free) may have the capability. There was an audio to ascii plugin, I don't think it still works though.

You could do it in Blender, because of course you could do it in Blender. Blender is free. 

For a more programmatic approach you could use something like Processing or OpenFrameworks (free). You need Java or C++ knowledge to use these.

It is definitely possible in all of these programs, though in none of them is it a beginner-level operation. The simplest workflow would probably be After Effects, though that might be my bias because it's the one I know best.