how to morph 2 animated png sequences for a seamless transition.

I would start with a new comp that contains only the last frame of the first video (your png sequence) and the first frame of the second video on the second layer. The comp should be as long as you want the transition, plus a couple of frames. 

The next step would be to figure out which elements or objects in each layer you would want to try and blend and start fiddling with hand-drawn masks instead of auto-trace and Reshape or even just any of the distortion tools to bend things until you get the halfway point between the two images that are fairly close and can be camouflaged by blurs, glows, color corrections or additional layers with morphing and bending shapes. 

I can't give you any more specific suggestions unless I can see the last and first frames you are working with.

I've morphed a sunrise in the mountains into a sunset at the beach by just bending the mountains and a bunch of blurs and some blend modes. I've turned a shot inside a paper mill into a truck driving off with a warp to a funnel and slid into the back of a truck. I have even had a character walk around a corner in San Francisco's China Tow and end up in Times Square so that it looked like one continuous shot. The most effective transformation or transition depends on the story you are trying to tell with the cut. If it's just eye candy, about anything will do. 

When you get this short transition comp working, drop it in the main comp between the two original shots or drop it in Premiere Pro and see how the transition plays. 

Reshape only does linear moves on static imagery. Anything else will require different techniques like manually warping images with other distortion effects, animating a s**t ton of masks and shape paths or buying advanced morphing plug-ins. Without seeing what needs to transition to what we can't be more specific. Show us some images.

Mylenium