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See the SVN for these scripts. The autoflip = 1 should likely be on if you've converted the files originally from DDS.
Final DDS should be as close to the original sizes as possible, keeping under 15MB, see Overhaul Models and Textures at the bottom for notes on this but basically with alpha it is usually 2048x2048 maximum and without alpha it is 4096x4096 - although only needed on very large creatures like Dragons or Giants.
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