Sounds great! There is a mod out there as well called Conus' Historically Accurate U-boat Emblems 1.3 that I've been looking at. Quite a bit of good stuff there too.
If you use GIMP it's quite easy to convert those, they all use a certain colour to represent alpha channels for how it was done in SH3. Use the colour picker to select that colour and then Colours->Colour to alpha, done.
In the meantime while I was working on porting over boats from SH3 I improved the VIIC to include some bilge action and even diesel exhaust.
It still needs a bit of work but here is what it looks like so far
