Alright, here's another hurdle. I took a screenshot of my feats menu ingame and brought it directly into photoshop. Then I took i_empathy03 (the feat graphic for master empathy) in the gui erf and replaced it with one that was solid red. The texture's header said it was 32X32 pixels so I made mine that size. It worked fine and when I looked at my feats there was a small red box where the picture used to be so I screen captured that too. Then I selected the box texture which was clearly defined and then dragged it into the first screen so I would have a selection of the same size and shape. I positioned it over the empathy graphic and copied that into a new texture. The only problem was that this selected area was only 27x27 pixels. I played around with it more, making sure there were no resizing errors and found that i_empathy03 actually is 27 pixels but was then blown up.
The texture had to be resized to 32 (the nearest higher power of 2?) for Kotor to display it properly.
This means that probably many of the textures, once we sucessfully convert them, will be blown up by an untold number of pixels. I tried to find header data that could represent a 27 or 5, but I don't think it's stored in the file.
Just another thing to keep in mind.