Questions and postings pertaining to the usage of ImageMagick regardless of the interface. This includes the command-line utilities, as well as the C and C++ APIs. Usage questions are like "How do I use ImageMagick to create drop shadows?".
It's of course possible with more than 256 colors.
If you have problems with one special image, then maybe you can upload that one somewhere.. And: Which ImageMagick version are you using?
Some small hints: If your input file is 16bit per channel, and you want to produce a 8bit per channel file, then make sure that "-depth 8" is BEFORE your "+dither colors .." (it's normally better that way). And if you want to save the output without any PNG optimizing (if there's an error in your IM version), then try to add specific PNG output options, e.g. with "PNG32:output.png" (for 4x8bit).