I've discovered that you're not home and dry with png images even if you do use 8-bit colour space. For my Norwegian editions of "Three in Norway – by two of them" I used the images from PG, but reduced the number of colours to 16. The
original language edition uses png, the
modernized one uses exactly the same images converted to gif. The png versions show up all fuzzy on my PRS-T1, the gif ones are all right.
Darn....