Some comrades and I have been working on a http://daggerxl.50.forumer.com/viewtopic.php?f=16&t=94 for when this finally gets done. The goal is not to make ridiculous 1024x1024 high resolution textures, which veers away from the artistic direction and nostalgic feeling Daggerfall conveys to many players.
Instead, we hope to redo every texture (either by scratch or by using the original as a base) at 2x their original size - just enough new detail to do the game justice when running upwards of 640x480, while still retaining the Daggerfall feel. For instance, you can already see my new exterior tavern textures http://i32.tinypic.com/2ewz61u.png.
Lucius intends to implement basic replacement support into the next demo release so we can test our work. Right now, I'm working on Castle/Tavern textures, Levethian is working on desert building assets, and Ghost Line is doing terrain. Anyone who's interested can just jump right in and start trying their hand at making new Daggerfall textures. There's currently no real roadmap or roster, and we're all basically just doing our own thing.