2d - Your recommendation for path construction from a single background image?

So I currently have my background as a single PNG and some obstacles (like blocks as part of that PNG). In order to create a path, I currently store pixels above a unique green color (my hill) and use this to move the character. My question is, is it better to create something like a collision layer mask or somehow convert my PNG to a bunch of tiles? Is this possible?

Answer

Two programs you should at least take a look at are Mappy and Tiled. A library for XNA integration with Tiled called TiledLib has been developed and could be of some use, if only to take a look at for ideas.