To try to answer your questions:
1.) “round out the surface with 200x200 png gradient” - For now, just try the same PDF I posted earlier which is 200x200 pixels. I can tell you how to make that in Photoshop but let’s come back to that.
2.) “keep 200x200 pixel image geometry count down when converting to mesh.” - There’s no need for any other extensions. The Bitmap to Mesh extension’s name is a bit misleading as you don’t need to convert it to .bmp. Using the .png is fine.
See gif for the import process. For some reason it interpreted the transparent part of the png as a texture and therefore applied height to. This just adds an extra step that requires turning hidden geometry on and deleting the extra little outside bits we don’t want.
