I'm not sure if AGI Studio is open sourced or not. Other people have worked on it since Peter Kelly abandoned it, but the most recent development is quite some time ago.
The original PICEDIT doesn't work very well on my PC, so I'm not sure how many people use AGIStudio for picture editing these days. Perhaps they use Dosbox to run PICEDIT, or more likely they are using WinAGI.
The command line option is now on my todo list.
Under Win98, Picedit worked fine. XP's got problems with it. Some years ago, The Joker taught me how to get around that, and I got the impression that Klownstein uses the same technique.
This technique (as far as I can remember) goes as following:
1. Draw a very basic, rough outline in Picedit (boot it up in Dosbox or whatever, suffer the weird shit it pulls for a short amount of time, then quit as soon as you can). Pic should be saved as BMP. This step is mainly to get the alignment of your lines right, not to do any actual drawing.
2. Open the BMP in MS Paint or whatever you want to use and flesh everything out.
3. To get the details (and especially dithering) in, use the selector tool to select the part you want to alter, copy it, open the Views editor in AGI Studio, paste it and treat it as a view. Then copy-paste it back into your BMP once you're done.
4. Save the file and convert it to an AGI picture using Vector
So... nope. People do use AGI Studio for picture editing, but not the way you think
The Java version of Picedit helps alot in getting rid of the pain of step 1, though. Maybe it can be used to add a 5th step to the process: tweaking the picture to become less resource-intensive (turning it into as little vector commands as possible)