The tool is to be used with .PNG spritesheet. The .gif export is to be used more for showcase in twitter, forums or similar, or maybe use for pixelart purposes due .gif is only 256 colors and just one color for transparency.
For max quality you have to use .PNG spritesheet , no palette limitation and in the "custom" tab set "scale" to "1" to avoid any pixelation.
Are you looking an HD effect or a pixelart FX?