Hm, I created a whole bunch of new icons today and saved in DTX3 format. And they look pretty good. I'm not sure if saving to DTX5 would give a very significant better result (on the tiny icons), but I'll use DTX5 for my new icons in the future.
I found another thread with people musing and linking on the same topic, over at http://www.cgchat.com/forum/showthread.php?t=13304.
I've tended to not use DXT3, because it seems half the time, the nVidia filter totally DE-STROYS the exported file, kind of random. I actually made 3 DXT3 icons last night without problem though *shrug*
My view on size is this. I've looked at all the oblivion textures. None but a few are bigger then 512. Instead of saying I'm wrong, I'm lying, but...but, but, just check it for yourself. A couple of sky's are 1024 large textures and a copy of normals with specularly are that size. I'm seeing sizes of 2048 as the average size in packs everywhere and talk of above. I say do your work, You can make a very good sharp game texture at game size without stopping the game coming to a complete stop just to look at a building.
It's a tough call, that's for sure

As modders, we don't have the restrictions that a game company would, we don't have to try to fit everything on a set of discs, but we don't want to give peoples' video cards hemorrhages either, just nice little download packages. But at the same time, a lot of people these days really want something high-res or high-quality, especially the screenshot group

Recently, I've quieted my polycount/imagesize nazi, but I've been second-guessing that too.. O_o
Anway, thanks for the tip on Blend-if, skydye, I forgot all about that, and never realized some of those sliders could be split like that! (Maybe that's why I didn't get my Photoshop cert, hah) Could just be part of the effect I'm looking for. And speaking of hidden features and whatnot, CTRL-ALT-Tilde (~, or above the tab key, console key to everyone else) makes a soft selection of everything 50% luminance and up. It does consider any visible layer, not just the current one, and is similar to ctrl-clicking on a color channel. I find this one useful for setting up soft glows, I'll start a new layer set to soft light or overlay, ctrl-alt-tilde, and fill with a light color, deselect and blur.
Also, does anyone know of an app that will edit filters? I keep a sizable amount around, and a while back I went to clean up the junky ones I never use, and categorize many of them to fall into similar menus on the filter drop-down list. It's lame to have a looong menu, when half of the entries only have one filter in them. I was able to hex-edit most of them to my liking, but was wondering if anyone knows of an easier way?
(they're all free filters, i'd be willing to share if anyone wants my current set)