PIL does not support interlaced PNGs at this time (no timetable on when it actually will either). To be able to read PNGs in PIL, they must not be interlaced. Modify your OUTPUTFORAT with a FORMATOPTION like so:

OUTPUTFORMAT
  NAME png
  DRIVER "GD/PNG"
  MIMETYPE "image/png"
  IMAGEMODE RGB
  EXTENSION "png"
  FORMATOPTION "INTERLACE=OFF"
END