I'll try to assemble a few good comparison pictures by tomorrow.
Generally, here's the gist of it: The mipmaps are stored along the other textures within the TXD-archives. However, the tools we do have available either eliminate those mipmaps (TXD Workshop) or only replace the base-level-texture, but retain the mipmaps (Vice TXD). The former is the more desirable solution, as the game can actually perform without mipmaps, but it will make it look a tad bit uglier with some textures (especially animated water textures).
The latter makes the texture edits visible only up close to the camera, as the mipmaps, of course, kick in the further away the camera is, creating some really cool dimensional-distortion type effect, but retaining otherwise little use in real texture editing.
TXD Workshop would be ideal for replacing entire batches of textures, but (at least on my computer) it has a big flaw: It cannot read game-provided TXD archives which store big textures (say, 512x512, which I believe is the biggest texture size stored within the game). When attempting to, it will report an "Out of Memory While Expanding Memory Stream" error message.
Now (and this is new development only achieved some time last night), however, I figured out a solution if you are a "victim" of this bug. Simply rebuild the entire TXD archive!
... okay, it's not so "simple". What you got to do is extract all the regular textures and their alphas into one big folder, then re-insert them, file by file, into a new TXD Archive using "Vice TXD" (TXD Workshop has a tendency to crash while attempting this). Be sure to retain all the original filenames.
Now, after you made a back up of your old txd archive and replaced it with your new one, you can test your Stage textures on Sonic Heroes...
... only to realize that the game "cannot create world" or something like that.
NOW you open up your new texture archive in TXD Workshop, click on the drop-down menu on the lower right, and select "GTA VC," then hit the Save button again. FINALLY, it should work as intended.
Hope this is helpful to some people out there. If I am not mistaken, this can be used on just about everything, from menu textures, to characters, bosses, special effects, common objects, etc.
EDIT: Now, isn't this a much better fleet?
This post has been edited by Herm the Germ: 21 September 2010 - 08:34 PM