If you have an image editor such as Photoshop Elements, you can easily make a gradient with transparency. Don't use a background layer and don't flatten. Save it as a PSD or PNG file to keep the transparency and import it into Premiere Elements (PE).
If you want to work entirely within PE, probably the easiest way to do this is with the track matte key as PE doesn't provide the tools to make the gradient with transparency directly.
You can make the gradient in the Titler by creating two rectangles, one covering the bottom half and the other covering the top half. When you create the rectangle, click on the color properties button in the titler and select linear gradient. Under the gradient will be two buttons. On the bottom rectangle click on the right button and set the color to black, on the top rectangle click on the left button and set it to black. By adjusting the spacing between the black and white buttons, you can control the width and positioning of the transition area. Heres a capture of what it looks like:
gradient.jpg
Note that the transition is different on the top than on the bottom because I used different positions for the buttons. You can get quite a bit of control this way.
When you are happy with the gradient, exit the titler and place the title over the other title with the text. Apply the track matte key effect to the text title and set the properties to use the gradient track as the matte and composite using matte luma.