APNG was rejected primarily because it used image/png when it was clearly a video, and the WG felt that images shouldn't handle video. When video/png was offered instead, Mozilla rejected that because it felt backwards compatibility was more important.

So, basically, it was rejected due to a pissing contest on the least important part of the specification.

libpng is a reference implementation of the PNG format. They don't have to support every third-party extension.

But libpng provides callback methods for "unknown" chucks, so the application can read and handle them. So it's possible to process APNG with libpng.