I remember reading about this glitch a few months back in this thread, post 13, but i miss understood (AaronLite solved the issue by disabling native mipmaps but i thought he disabled fast mipmaps, my bad).
However, using fast mipmaps causes some glitch in the water appearance, same as using AA. Tthis topic was discussed in a thread at Dolphin forum but no solution was found, other than not using AA or fast mipmaps. This means if you want your textures to load properly you'll have to get used to the water having some... foam
I don't have much spare time but i'll retexture more than the HUD in this case. Though Dolphin only supports 2040x2048 i'll try to do most textures at 4096x4096.