
http://www.targetomega.com/sl/omegabeta.html
Why use PNG?
-- You may already cut PNG files as part of your everyday work, so you can now upload them directly to SL without first converting them to JPEG, Targa, etc.
-- Unlike JPEG, PNG is a lossless format.
-- PNG officially supports "easy" transparency mode. This is especially useful if you don't need partial transparency (though that is also supported.) Basically you don't need to deal with alpha channels at all... just "paint" with the transparent color in your favorite editor, save to PNG, and voila, transparent images.
-- Of course, the full alpha-channel (RGBA) is available to you as well.
-- Supports all PNG image types: grayscale, RGB, RGBA, 8-bpp, 16-bpp, matte (background) colors, interlacing, various compression modes, etc.
The client has been successfully tested with numerous PNG images (including those from the official PNG test-suite) with no known issues. However, this software is beta in nature, and your help is needed to further test this functionality before the patches are submitted to the official Second Life repository, hopefully by next week.
A Windows XP client is available now from the above link, and a Mac universal binary will also be made available (sorry Mac users, RL commitments got in the way.) If you would like to compile the code yourself, the full source code is also available now under GPL v2 terms.
Your feedback (positive or negative) is greatly valued. I hope to incorporate a few more small features such as this before embarking on the more "experimental" ideas I have in my head.

Thank you,
-peekay