This isn't minecraft with 16 bit graphics.
In some way, it is... .dds are 16 bit... 5/6/5 for the R/G/B channel... for the alpha value, it is 4 with dxt2-3 and 8 with dxt4-5... sins use dxt5 for the game and dxt5n for normal map ( red channel is moved to the alpha channel because more bit mean more quality )...
Well, there is maybe a way for increase the general quality and decrease the texture memory use ( by example the titan tech rebel cl from 10.7mb to 6.7mb )... will decrease the main memory use but will add some load to the GPU... will not say more until Rebellion is released with the modding tools who will allow me to test my theory... already certain that the trick will only work only on big texture ( capital, titan, starbase )... with smaller texture, the effect is reversed, main memory use is increased...
the limitation is in the game engine since it's not 64-bit
Untrue... the real limitation is the windows OS with default installation... the iron engine is really a wonder... can push it to use 3gb on windows 32 bit, 4 gb on windows 64 bit, have reach over 11.5 gb before crash on Linux x64...
There is one directx limitation too... the max size of texture that directx can handle without loose the GPU hardware acceleration is 4096x4096 ( 8192x8192 with opengl )... increase the size of the titan map will simply lead to the GPU to give up and transfer the work load to the CPU who is already push at max... you will go from FPS ( frame per second ) to SPF ( second per frame )...
I think that it is possible to make the game use less memory with equal quality ( equal quality when max zoom in but improved quality when zoom out ) but it is something for after the official release... not only a texture work need to be done/tested but .mesh modification too...