I've never had problems when saving them via PNG. Maybe you want to take a look at the tutorial in my signature and try it with that. (miniimage.xcf ist just the black border)
at "base.rel" choose the rel of the stage where your downloaded stage goes over (in your example the green hill zone rel. then at "to replace" choose the stage you want to replace (in your example rainbow cruise). then you will get your rel to download.
A PAL user here. I am sorry, I don't know alot about codes, but I suggest you to switch to NTSC (get NTSC iso, load it with ocarina codes over USB-loader). It will make a lot of things easier. If you need further help regarding setting up NTSC with USB-loader feel free to contact me.
Your Riivolution should be fine. Riivolution 1.05 was buggy with Brawl.
Did you follow any tutorial for setting it up? Your codes are located here and named correctly?: /codes/RSBP01.gct
If the characters has new moves (and is not only a costume) it will replace the character entirely. Beneath that you can clone and add up to 100 characters to your brawl game.
Think of every character featuring some costumes and ONE moveset. Now you can replace some/all costumes and the moveset, but there is only one moveset which is nearly independent of the costumes. But gladly you can clone characters to appear more than once in your character selection screen (you can have up to 100 characters). hope this helps.
Suggestion from a PAL-User: Get a NTSC-iso and load it through an USB Loader. Then you can load hacks via Gecko/Ocarina too.
It is possible. I dont know your Riivolution XML but where are your custom stages located and why came it at the cost of not having custom stages anymore?
If you still have questions: I made a little tutorial for customizing the SSS. There's a link in my signature. Sadly I never tried the signs below the stages that show from which game the stage is from..
I never used HexEd tool and dont know what it is but as far as I know you just need a modified rel file and the .pac file of your "new" stage. If you are PAL-User make sure that you have a PAL rel file.
Do you think you are able to handle all the codes and stuf like that which are included in Project M? If you use it you NEED to give credits. I personally think it's okay, as long as you credit the persons. But why don't you ask them!?