According to its specification, the PNG format has several "types": 0 : grayscale without alpha channel (1,2,4,8,16) 2 : true color without alpha channel (8,16) 3 : indexed color (1,2,4,8) 4 : grayscale with alpha channel (8,16) 6 : true color with alpha channel (8,16) (Please note that ALL types support transparency, even without an alpha channel. With #3, transparency is defined as part of the RGBA palette; with #0 & #2, transparency is GIF-style: Assign one RGB color as 100% transparent pixel.) Which types are supported by the game and/or Content Patcher? EDIT: The reason I'm asking this is that I want to optimize the PNG files of the hundred+ mods I use. With OptimPNG, if I do not restrict it, sometimes it converts the PNG file from Type 6 to Type 3 or Type 2. The end result is indeed much smaller than the original PNG, but I'm concerned that the changed Type will cause issues with the game and/or graphic patcher mods such as CP.
PNG support is handled by SMAPI, which should handle any PNG type so far as I know. I suggest converting one PNG that's loaded through SMAPI (or Content Patcher) to each type and checking if it works in-game. If that test works, it should work for all mods since PNG support is centralised in SMAPI.
Okay, after experimenting, I can state this: LooseSprites/Cursors can NOT use paletted PNG -- the title screen will show banding, and the dialog pop ups will have this crazy quilt patch background. Still readable, but the effect is ugly. Pictures and Characters seem to accept paletted PNG -- still checking Furnitures and townInterior seem to accept paletted PNG as well I'll keep watching for quirks & glitches, if any.