The texture replacement file is a file named like the romset ended in .pat in the SCRIPTS folder (ex: daytona.pat)
Each line of the file indicates a texture replacement. The format is
ID1 ID2 Format Filename
ID1 and ID2 are the ID pair used to identify the texture to replace
0 if you replace the texture with a grayscale texture, so it's handled through the model2 coloring pipeline (like original ones)
1 if your texture is already colored. Then only lighting will be applied (linearly) to the texture
There is no restriction to the size of the new texture (apart from your videoram)
Filename is the name of the file to use as texture (.png). Alpha transparency is supported for Format 1 (colored) textures.
In order to make a texture replacement, you need to know the ID pair of the texture you want to replace. To know the
ID pair, first dump the texture cache from a running game using the Game menu option "Dump texture cache".
This will dump the cached textures in png format to the TEXCACHE folder. The file name of the dumped files is ID1_ID2.png
that way you can get the IDs and the corresponding texture as base for replacement.
The .pat files are read on game load, so you need to re-load a game to see the new textures.
You can start a line with // indicating a commented line,and it will not be processed