Hi, the skin editor never worked for me neither
so I edit the SkinDefinition.xml file with a text editor (notepad++) and then I check my modifications ingame.
The bad point is this method requires closing and relaunching the whole lotro client each time you wish to control the results/changes
To work on the pictures I use Photoshop and Xnview (which is well adapted for light treatments as color, light/contrast, file format conversions and compression, resizing and batch processing).