I was looking at this issue a while ago. To prevent PNGs from being converted to JPGs, you also need to set the recompress original jpg quality setting to 100. There are a few more details about the issue here: Why default to converting PNG to JPG? - #18 by simon.
Let us know if making that change doesn’t solve the issue for you. I think that ideally a single setting would be used to control this behaviour. If that isn’t possible, we’ll need to update the setting descriptions to make it clear how to prevent PNGs from being converted to JPGs.