  Many classes of gamma-ray sources, such as gamma-ray bursts, blazars, Seyfert
galaxies, and galactic black hole sources are surrounded by large amounts of
gas and dust. X-rays and gamma-rays that traverse this material will be
attenuated by Compton scattering and photoelectric absorption. One signature of
an intervening scattering cloud is radiation-hardening by electrons that have
been scattered and heated by the incident radiation, as illustrated by a Monte
Carlo calculation. Compton scattering provides backscattered photons that will
attenuate subsequent gamma rays through \gamma\gamma pair-production processes.
We calculate the pair efficiency for a cloud illuminated by gamma-ray burst
radiation. An analytic calculation of the flux of X-rays and gamma rays Thomson
scattered by an intervening cloud is presented. Illuminated clouds near GRBs
will form relativistic plasmas containing large numbers of electron-positron
pairs that can be detected within ~1-2 days of the explosion before expanding
and dissipating. Localized regions of pair annihilation radiation in the Galaxy
could reveal gamma-ray sources embedded in dense clouds, or sites of past GRB
explosions.
