I worked up a quick Python script that tests which palette offset to use and then converts a RGBA PNG ..
https://github.com/hstubbs3/CommanderX1 ... png_to_bin
the png I started with was 128x64 ... random shot of spider mastermind sculpture from DOOM that I delete background from to make alpha..
it so happened to choose palette offset 1 (greyscale) for this image but you can probably sus out what its doing or force it around..
this just spits text I could copy into my assembler code to make the _very_ quick/dirty test PRG by copying the sprite data to VRAM and creating 2 sprites - one for the left side one for the right side (because the image I started with was 128x64 )
but definitely seemed to work OK ...
Hope that gives you a best. Catch ya round.