... but doesn't write PNG8 with alpha transparency, unfortunately.
This comment on the YUI blog got me all excited by the possibility of having another designers tool other than Fireworks that creates PNG8 (palette PNGs) with alpha transparency.
Overall Paint.NET is a very simple and friendly program (as a non-designer I'm often intimidated by Photoshop's plethora of features) and I can see how I can use it for my future (rare, I hope) design needs 🙂 It's pretty impressive, free and from what I read, it has a dedicated community, plus a number of plugins (hmm, a smush.it plugin would be nice... one day).
I tried saving a PNG8 with alpha but unfortunately this feature is not (yet!) supported. I created an image with a sold red square and blue gradient that fades to 100% transparency. When saving as 8-bit (in order to create a palette PNG) the semi transparent pixels are all gone. It treats palette PNGs like GIFs (like Photoshop does).
Default (produces truecolor PNG):
With 8 bit option selected: