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GIF will allow you single-color transparency, while PNG has full alpha channel support.
See also GIMP Watermark removal
This is for text along a circle in the bottom of the circle. For the text on top of the circle, omit steps 3-5.
Resynthesizer allows you to remove watermarks and similar from an image. Download it from the GIMP Plugin Registry or my wiki. Move all files to GIMPPortable\Data\.gimp\plug-ins\.
For an example, see GIMP Watermark removal