Just a RE: on those images that Manila Editor doesn't take, try using my own Manila Editor (CFC), which can be found here:
http://forum.xda-developers.com/showthread.php?t=437777
EDIT: Actually, go here instead:
http://forum.xda-developers.com/showthread.php?t=470798
It's built on the information uncovered when I ported TF3D to QVGA, the original posts by D-MAN (brains behind original Manila Editor), and research done since by myself and D-MAN.
Supports all image types, does the headers properly, etc.
Image decoding and encoding quality should be better than Manila Editor as well.