Atlantis seems to create ePub cover images as JPEG format even if the original image placed on the document first page is a PNG. Is there a way to get it to use PNG format (most of my cover images are cartoon-style rather than photographic, so PNG would be a better format choice).
Yes, Atlantis always saves cover images of eBooks as JPEG. If you insert a JPEG cover image into your Atlantis document, Atlantis would save the image to the eBook as is (i.e. as the original JPEG image).