This is easily possible. Extend the "asset update workflow" with a new step, which creates the new image as a rendition to the original asset. Do not try to replace the original rendition, as this is normally the workitem of the workflow, and removing/re-adding while the workflow is running is likely to cause issues.
Also, I don't think that replacing the original asset is a good idea either. If you need to create a more efficient way to deliver it, I would either require the users to upload the assets already in that format, or create it as a rendition and deliver it instead of the original rendition.