I downloaded the compressed version.
The crunched release of v0.5 appears to be missing all the images that included Russian characters in there filenames so you need to source those particular images from somewhere else, like one of the full (uncompressed) versions.
I couldn't really find anything in this thread about it, so I'm truly sorry if it has been asked before, but is it normal for it to be pngs?
The game is created using RPGM and that engine uses (non-compressed) PNG image files by default.
To reduce the size of the PNG images include with this game the up-loader of the 'crunched' release has converted those images from PNG to (smaller) WEBP files, and then
renamed those new WEBP files as PNG files so that the RPGM engine will recognise and load them. (RPGM is 'smart' enough to ignore the image's file extension and use information within the file to determine the real 'type' of the image, and thus which image codex to use.)
Am I supposed to convert the PNGs to Webps and then view them?
You can do that if you wish, but if you just want to view the images (outside of the game) then it is easier just install the WEBP codex and use a 'smart' image view to view them. (see the definition of 'smart' in my last comment.)