
    First of all (this is NOT a snide response), if you're confused about
this issue, you will stumble over a lot of other things as well.  I suggest
that the weakness is your reference material.  Get "An Introduction to Ray
Tracing" by Andrew Glassner for very good coverage of the raytracing
algorithm.  You could also refer to the 2nd edition of Foley & Van Dam.

    On to the question.  The simple answer is that you just keep adding up
all the contributions and then clamping at the maximum intensity.  For
example, if your intensity values range from 0.0 to 1.0, then keep adding up
and clamp the resultant values to 1.0 (you might have to clamp the lower
bound to 0.0 if you have dark bulbs, but that's another issue =^).  So, you
get some illumination equation like this:

        I = Lambient + Ldiffuse(light[n]) + Lreflected + Ltransparent

    The contribution due to reflection is just summed with the light
intensity, as is the light due to transparency.  Now, a slightly less
hand-waving illumination equation is this:

        I = KaLa + KdLd(light[n]) + KrLr + KtLt

    That is, each component of the illumination equation is governed by the
material constants Ka, Kd, Kr and Kt.  So the maximum you can get from
transparency for a given object, for example, might be [0.4, 0.1, 0.5] for a
purple-colored glass object.

    Hopefully this answers your question.  I'll forward my "illumination
equation sermon" to you also.