While rare, there are good reasons for textures to be as highly detailed as 1024 x 1024 pixels--the maximum size. One of them includes using a single texture of that magnitude to span across multiple tiles to provide highly sophisticated floor ornamentation, an artistic achievement you may have seen lately.
Actually, the max size is 2048x2048 I believe, or something above that. Never tried uploading anything bigger. I have one texture at this size. It'd be interesting to find out the percentage of textures over 512x512, because I think it would be frightening. A certain person has a shop across from mine in Puea that has around 100 (or more) 2048x2048 and 1024x2048 low-compression textures all on display on a 1024m parcel. Not sure if they're targas with alpha or not, but it wouldn't surprise me in the least. My neighbor who was there before he moved had to move out, because she was right next to his store, and his store literally crashes the viewer framerate. I keep trying to get him to switch to vendors, but to little avail so far, he seems to be rarely logged in.
On an unrelated note, why is draw distance only two-dimensional? My draw distance is 128m and I have a picture of looking down on my land from 500m up and seeing it all in exquisite detail, including the above mentioned textures. Why oh why?
