It's not a bug to be resolved.

- Use JCE or any other editor to upload PNG images.
- Then use a plugin like IAKI getk2.org/extend/extensions/616-iaki-import-as-k2-image that extracts the first big image from your introtext/fulltext and sets it as a K2 image so you can use it in category listings and so on.

In IAKI's settings, add 999999 as the item ID limit. This will be resolved in a coming update.

Keep in mind that the update will feature a unique field to directly upload PNG or other image types and select the output format as well (e.g. some may prefer serving JPG & WEBP at the same time).

Enable frontend editing in K2 to allow users to submit content from your site's frontend. This is relevant to you: www.joomlaworks.net/forum/k2-en/49662-how-to-create-and-make-frontend-editing-available-to-my-website-users

If JCE is the default editor in Joomla, make sure the editor profile for frontend users allows users to upload images from JCE directly. This way they can upload PNGs, JPGs, whatever. More more info on how to use JCE you should direct questions to the JCE site.

Don't confuse JCE as an alternative to K2. JCE is just the WYSIWYG editor. K2 is an application in Joomla that can be used to replace the default Joomla article system (as K2 is much more advanced, yet easier to use).

That's it really.