what i do when skinning is do the skins...convert it
1. Body DXT1 6mipmaps
2. Windows DXT6 6mipmap
3. Windows Ext DXT6 0mipmaps
added it to game...then when im happy with it. I open the pds file for the skin and flatten it, rename it(so i keep the unflat version) and repeat the process.
the skins look sooo much nicer when flattened.