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preview-latex has a number of methods for generating its graphics. Its default operation is equivalent to using the `LaTeX' command from AUCTeX. If this happens to be a call of PDFLaTeX generating PDF output (you need at least AUCTeX 11.51 for this), then GhostScript will be called directly on the resulting PDF file. If a DVI file gets produced, first Dvips and then GhostScript get called by default.
The image type to be generated by GhostScript can be configured with
M-x customize-variable RET preview-image-type RET
The default is `png' (the most efficient image type). A special setting is `dvipng' in case you have the `dvipng' program installed. In this case, `dvipng' will be used for converting DVI files and GhostScript (with a `PNG' device) for converting PDF files. `dvipng' is much faster than the combination of Dvips and GhostScript and can be downloaded from the same sites as preview-latex (in fact, it is part of the CVS archive of preview-latex).