Very easy. Either 1- use a plugin that does that (easy to create if you know the basics of Motion),
or 2- stock two copies of that clip on top of each other. Lower the opacity of the bottom clip. Place a mask on the top one, position it correctly, feather the edges.
Any settings in the Color Board are not keyframe-able. Yet! <fingers crossed for future versions>
so, if you want to make a soft dissolve, grab'n drag your clip from the storyline while holding the alt-key = doubles the clip. Apply to the top one the effect mentioned before. cmd-T, secondary fades in and out, and the highlight fades in and out …
Another really simple way to do this: use the Censor effect. Select Method>darken and check Invert. Adjust Amount to suit. The nice thing is all of this is set up to keyframe too so it's easy to follow your subject.