We can do this, right? The game doesn't load the tga version, because it always loads DDS first. It just searches for those first, so you get the ones in the archive. It's got a lot of people over the years. Secondly you should check your compression settings. DXTn isn't for icons! You should be saving in RGBA8 or ARGB8 (whichever works). How are you doing your alphas? Did you do black background/white background differencing? If you make a composite mockup of the icons over a bare screenshot and compare it to an actual screenshot it would help diagnose the problems.
Okay, I'm calming down. Deep breaths, deep breaths.
Okay.
I'm using the DDS Converter for conversion, set to use nVidia (As opposed to S3), DTX1a, with alphas saved. No other settings (build mipmaps, dithering, fast compress) is checkboxed.
I made the alphas by:
example: used the magic wand to select the background (grey). Inverted the selection to get the item. Cut the item. Pasted the item into a new layer. Deleted the background layer. Saved as .tga.
I wasn't sure what you meant by composite mockup. Well, actually I do, but I'm just not sure how to make it. Um. I took some screenshots:
http://i468.photobucket.com/albums/rr50/Alaisiagae/Mod%20Screenshot%20MW/icons/Jaggies_Urfing.jpg
http://i468.photobucket.com/albums/rr50/Alaisiagae/Mod%20Screenshot%20MW/icons/Jaggies_Naspis.jpg
http://i468.photobucket.com/albums/rr50/Alaisiagae/Mod%20Screenshot%20MW/icons/Jaggies_Erla.jpg
http://i468.photobucket.com/albums/rr50/Alaisiagae/Mod%20Screenshot%20MW/icons/Jaggies_Crulius.jpg
I can't tell if the brightness is my fault or the game's fault. The icons looked good against a black background in Irfanview, but they look like crap against the transparent background in-game.