Which library is better for image processing, GD2 or ImageMagick? Is ImageMagick is supported by Drupal 7? If the answer is positive, which is better for image processing, between GD2 and ImageMagick?

Are any other alternatives for Drupal 7?
Drupal 7 supports ImageMagick with the ImageMagick module

I suspect better is subjective depending on your specific image manipulation tasks. The benchmarks I could find didn't conclusively favor either one overall but specific tasks were faster in one or the other. Opinion favors ImageMagick for quality but recent posts suggests GD2 has caught up.