You should be able to find a utility to batch convert all the BMP files. Then all you have to do is run a "find and replace" through your rc files to change .bmp to .png. It also shouln't be too much effort to comment the code that sets the wallpapers so you don't need to include them.

I can understand that this might be more effort than you are prepared to go to but I'm keen to see what a theme with over 1000 images looks like :)