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Just to sing the praises of Png. PNG24 or 32 - this is the ONLY full color web compatible format with LOSSLESS compression, and a NATIVE alpha channel for transparency. No 'halo's - no loss in image detail or color quality.

PNG8 is 8 bit color like a gif - and the detail quality is slightly better (tho most images will be downresed to 8 bit for this format.
 
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