It appears that the GECK is incapable of creating a buildings texture file larger than 1024x1024. I have a worldspace that uses, amongst others, the background buildings from the Pitt. These all have LOD models that use the DLCPITTBLDLOD.dds texture file, which happens to be 1024x512 in size.
After generating the LOD, all of these 'background buildings' had weird textures, basically the textures from other buildings. Looking at the .buildings.dds file for my worldspace, I discovered that the DLCPITTBLDLOD had not been included. After a lot of faffing around and re-generating LOD multiple times, I worked out the solution: I had to re-size the DLCPITTBLDLOD.TGA file to 512x256 then remove a (different) backgound building from my worldspace, at which point, lo and behold, the buildings.dds file contained the DLCPITTBLDLOD stuff. In other words, I had to find a way to make space within the apparent 1024x1024 limitation to fit the texture.
It seems that Bethesda themselves have some way round this limitation, since the buildings.dds file for (e.g.) DLC01PITTWORLD is 2048x1024. Unless someone knows how they managed this, it looks like 1024x1024 is the limit.
(Posted under Fallout 3 and Fallout New Vegas).