Chris_eve, Hans
I use DXT3 for everything with no problems and good resolution. If I find any textures that are not DXT3, I convert them using the DXTBmp Texture tool (mwgfx.co.uk) software that you mention with "Mip Maps" unticked. There is also Texture Manager by Don Grovestine that will convert whole folders of texture files.
As for "massive" my FS2004, aircraft, ai aircraft, sceneries, etc etc etc occupy 180.8 GB of a 223GB SSD. Ridiculous, I know!
But I'm pleased to see that a steady stream of FS2004 stuff continues to appear on flightsim.com