*points to post earlier* based on bit o research (ie testing) SFC - while being able to handle 24 bit files it won't display 24 bit files, but 8 bit. Its better for you to do the conversion to 8bit and use proper dithering than to let the engine do it and have your textures look... meh
That's not required. All SFC games can display 24 bit colors in game without any quality reduction, at least on my laptop.
If you have problems having SFC displaying 24 bit textures, it might be caused by your hardware or video drivers. BUT I am very sure that 24 bit textures have NO color dithering or gradient look for all 4 SFC games.
The only problem is that 24 bit textures take more space and resource, while the quality improvement is sometimes not very notable.
If that was indeed the case then a render from max w/o any special lighting rigs, antialiasing etc should look exactly the same as the sfc engines output (which it doesn't fyi). You probably noticed at some point that when viewed in mod viewer you get a warning text file named "above8bit textures". So I did a little bit of expierment when i ran into problems w/ my backdrops (which had lots of graidents on them) based upon the idea (from that warning) that the textures were being reduced. So here is what i did, and you can do it to. Open up your model in mod viewer, preferably a fed w/ a good sized saucer w/ at least 1024x1024 saucer textures only (ie saucer takes up most of the space), or if you have a high quality nebula texture that will work even better (just map it to a plane). Now open up a copy of the high quality texture in a paint program (i use photoshop cs 3). Compare. You should notice that there seems to be lesse color depth (ie some colors are not the same). Further you should see soem gradients, though harder to pic out on solid (ie one color textures) multi color textures (or those that utilze chormatic noise or mutilple colors for aztecing) should have obvious graidents going on. This is more noticible if you have areas that have gradients but is still visible in most cases. Now reduce your copy of the high quality textures (preferably in a good paint program such as photo shop) to 8bit with no ditheirng. Now they should look very similar (there are some differences, prolly due to different methods of reducing). Before you ask, i reduced a copy of the texture, not the one being displayed on the model (though that doesn't matter until you reload the model anyways)
based up that I found the only to ensure that i have full control on how the textures appear in game was to do the reductions myself and play w/ the dithering until it looked right.
O and its not my system. 2x 8800 gtx in sli with latest graphic drivers at the time of testing (about a year ago, only w/ sfc OP)