Can transition be Fade In/Fade Out?

Since you may be already using jQuery (most WP installations do), I edited their rotating-posts.js file.

Looked for the line (around line 42) :

document.getElementById('rp_post' + i).style.display = "block";

and replace it by :

jQuery('#rp_post' + i).fadeIn(400);

you may want to add a callback when the fade transition is finished (in my case I wanted to resize the parent container for my responsive layout) so you can do

jQuery('#rp_post' + i).fadeIn(400, function(){
    // add your calback here
});

hope it helps