Looked around, some blogs, the experts say only 8bit indexed in PS. Some plugins that cost a lot infer 8bit RGB BMP.
In the end it's a pain creating my gunsights in PS. Saving as RGB BMP allows blur effects and dithering. Indexed, well I'm not sure game gunsights and the effects were what 8bit indexed was all about. Now 16 and 24 bit RGB, yes. I suppose 8bit is to cut down on what gets put in memory while flying around in the game.