For any pixel with a non-0 alpha, it is treated as having an alpha of 255 (or 1, in a schema where alpha is binary/boolean). On top of this, the 'background fill' value for any pixel with less than 255 alpha is white, causing a horrible border effect:

https://www.dropbox.com/s/3794m59uhvecxn6/png%20support%20is%20broken.png?dl=0

0xabcdef on 8/12/2018 10:39 PM:

This may have something to do with premultiplied alpha. The game assumes that the JPG/BMP resources are premultiplied unless specified otherwise and semitransparent resources such as explosions look fine.

george moromisato on 8/13/2018 4:36 AM:

I think @0xabcdef is right: this is likely due to premultiplied values. I'll try that fix for 1.8 Beta 3.

If that doesn't work, then see also: https://ministry.kronosaur.com/record.hexm?id=80350

george moromisato on 8/15/2018 9:02 PM:

In 1.8 Beta 3 I premultiply the PNG values at load time.