Yes. PNG files work, but they have the downside that if you prefetch them they use up a lot of RAM (because they have to be stored decompressed in RAM).
Do note that if the texture pack is so old that it uses the old way of naming files (from the 4.0 era), it'll fail to work for that reason.
Do note that if the texture pack is so old that it uses the old way of naming files (from the 4.0 era), it'll fail to work for that reason.