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Thanks Kugelfang.
The png in gimp is indeed transparent (grey checks). The non-transparent portions of the PNG do appear as intended in pep, but the transparent areas are rendered as black in pep.
I do know that pep can handle material colors, because those without textures defined do appear as expected (white). I do not know if it can handle material colors in conjunction with an image texture though. I poked through pep's website but wasn't finding anything readily pertinent. The gargler engine isn't providing much detail either.
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