This may be old information for you folks, but I just started getting into repainting and here is what I found...
Since I downloaded DXTBmp over a month ago, I have been using it quite extensively to modify and create repaints. It was only today that I notice how very badly DXTBmp compresses DDS files. It is particularly noticable when you have some gradual changes in shade over a larger area. Lots of blockiness and introduction of artifacts. Just open up an instrument panel and save it without any changes and compare it to the original version to see how much the quality of the image has suffered. However, today I happened to come across the plugins from NVidia. I have an ATI card and use Paint Shop Pro 9, but was able to get an older version (v5.18) of the plugin that works great.
If intererested, take a look at the last download in the first section of this site for more information:
http://cs.elderscrolls.com/constwiki/index.php/DDS_ToolsHope someone finds this helpful.
Peter