Am I the only one who has assumed that the OP is referring to texture replacers? Such a thing can't be done. A while back, there was an attempt to create an OpenGL sourceport of Arena (named "ArenaXP", the first demo is still on the TESNexus). It allowed you to extract sounds, sprites, textures, almost everything, but it as far as I know, the ability to recompile the formats once they're extracted into working form can't be done.
I did, but once someone brought up the fact that his screen was probably stretched, that made a bit more sense to me. I still wish Stanza (I think that was his name) would've finished that project. He was uncovering some pretty interesting things, such as removable clothing (no pun intended...).
Arena strikes me as one of those games that's so dated a graphic overhaul really couldn't do much, anyway, save for maybe running in a higher resolution. New textures, 3d models, and shader effects would be lost on something as simple as Arena and are much better suited to the later games.