There are still some things which are important:
The N64 Emu/plugin loads the texture outside so it doesn't matter how big the original game is! But it always was and would be a problem to try these game on a real N64, that's why the emu reads it it outside! It wouldn't be a problem to read a game which is already 700MB for the PSX on an emu like it isn't a problem to retexture a game which has 256MB on the N64-emus!
But it is a problem to create a plugin which can do that!
And Pete Bernert is the Master of PSX GPU Plugins, so when he can't do it, that doesn't mean, that nobody can do it, but it would be very hard and you need a big PSX GPU knowledge! Probably lewpy could do it! ^^
No just a joke...
But I really don't think it is IMPOSSIBLE! DId you ever thought some years ago, that we will have some retexture projects and 2 plugins which can change textures (probably 3, when orkin returns)?
Did you know, that there is also a emu, which can retexture old dos games?
I also have a version of satourne which this feature! That are all really different things, but you see, it's always possible with enough knowledge and the needed passion for this stuff, that you could create such a plugin in my opinion...
(offtopic: my first post since over a half year... f*cking exams!)