Well, I was looking into starting to screen print t-shirts, and while I was looking into that, stumbled on this idea, which is WAY easier on the wallet, and in my opinion, a cooler effect.
All I did was blow up the logo in illustrator, printed it on an overhead transparency, cut the transparency to use as a stencil (yes it sucked, and took almost 3 hours), spraymounted the transparency to the shirt, and misted two strengths of bleach onto it (30% for the outer darker part, 100% for the inner lighter part). Threw it in the dryer to set it and beat the bleach crystals off it, then touched it up with a fabric dye pen a couple places (the little black 'islands' on the tape, mostly).
If you have an exacto knife, a shirt that is at least half cotton, bleach, 3m spray mount, and overhead transparencies, you're in business!
I can make a more in-depth step-by-step next time I make one, if anyone cares.
Edit: Oh, and for people who don't recognize the design, it's the "The Pirate Bay" torrent site logo.