For instance, I have a line with a stroke colored navy blue over a shape. How can I make the area covered by the navy blue line transparent, including that area on the shape below?
Let me see if I understood your question right (using Illustrator CS 6):
- We start with this shape:
- Select the dotted line and from the main menu select Object/Expand Appearance
- Select the dotted line again and select Object/Expand
Step 2 and 3 will make each dot of the line to become separate objects.
- Select both the dotted line and the background and from the Pathfinder panel, chose Minus Front
- This will be the result