So 2019, and we have a new console to finally do hd/uhd texture packs for, and no hacks or use of third party software, this is the real deal, welcome to reicast texture modding!

So with the introduction to the core of reicast, they now have added the ability to dump, and inject textures for dreamcast games (havn't tested naomi at time of writing).

So how do you do it, well taking into account reicast and retroarch is all set up, you can get to work.
Right now there are two new options, LOAD CUSTOM TEXTURES and DUMP TEXTURES.
These need to be toggled to on, you can leave them both on when dumping textures, they don't interfere with each other, though if the game does have a lot of textures, there may be slow down when dumping, so when your finished, simply toggle the dump textures off.

So you've loaded the game, played and now you have the textures, which will be in retroarch folder /system/dc/texdump/{game id}

When it comes to modding the files, reicast is a little bit fussy, any deviation from the format will crash retroarch.
So load up the texture you dumped that you want to mod in your fave app, the resolution can be as high as you like, and can easily take enlargements 6 times the original file size (maybe more), suitable for 4K mods, making sure you it keeps to same standard as the original.

Which comes to where to load the textures, go back to your system/dc folder, and make a folder textures, create a folder with the {game id} on it, and place the modded textures you want to change in there.
Load up retroarch and reicast core, make sure load custom textures is set to on, and run the game, with any luck you should see your new texture, if however it crashes, then most likely something wrong with the texture.

Type of games that confirmed to work with texture dumping.
3D games, obviously.
2D games, it is possible to dump the textures, or in this case tiles, which are dumped as non palleted textures, meaning you can create sprites with more than 16 colours, but does have the downside of multiple copies, in the case of games such as mark of the wolves, each tile is individually dumped, so can end up with thousands of texures! its pot luck.
Emulated games, are usually in the frame buffer, so cannot be dumped, all you will get is what ever is on the screen, however not fully tested.

Feel free to ask questions, or too add.