I have an image that has just letters on it with a transparent background. I was thinking that as my game is loading that these letters could "fill up" with a certain color. So they would start out gray and then starting from the left each letter starts to get red. I was thinking about overlaying a transparent rectangle over it, and stretching the transparent rectangle based on the progress. But then the background also will turn red and I want just the letters to be red. Any ideas?
I don't know how this feature would be implemented in your specific development environment, but the solution to the problem you describe is masking.
Basically, apply a mask to the progress bar in the shape of your letters and then the stretched rectangle won't be rendered outside the mask.