Yes, Scan Tailor: http://scantailor.sourceforge.net
To edit PNG images you can use GIMP: http://www.gimp.org
They are both very powerful open source tools.
Edit: Scan Tailor outputs .tif images, but it's all the same (lossless just like PNG). If you're keen on PNG you could do a batch conversion using IrfanView or similar. But honestly, PNG/TIFF, it's all the same to me - though it may not be the all the same with the e-reader, so you need to experiment.
AFAIK, ePUB splits graphics automatically. So you could, perhaps, set the top margin in Scan Tailor at 1 (maybe except for the chapter headings) for the pages to transition more smoothly. Then you would basically have an ePUB full of graphics, specifically "tailored" for the PRS-350, which I believe is what you're trying to accomplish. But you won't be able to search or highlight, they're images. Then again, same with a book borrowed from a library... You may be onto something.