I have it working on my Tegra2. Here's a snippet of my code:
overlays[i] = new Overlay(m_world, rcDest.left, rcDest.top, rcDest.right, rcDest.bottom, texture);
overlays[i].setTransparency(50);
overlays[i].setSourceCoordinates(rcSrc.left, rcSrc.top, rcSrc.right, rcSrc.bottom);
overlays[i].setDepth(-100);
overlays[i].update(m_fb);
I've found that custom clipping plane values can cause overlays to disappear.
This works for me: world.setClippingPlanes(-1, 18000);
If I recall correctly, setting the far value to 20000 will make the overlays disappear.