On another note, texture compression should be usable in Direct3D 7, and loading DDS files isn't hard. Its exclusion from Blitz3D is pretty much unexplained.
I have been begging DXTC (.dds) support since I bought Blitz3D some 3-4 years ago... since they haven't appeared, I guess they never will. Same with tangent space normal maps... *sigh*
You can use irfanview to convert .dds'es back to tga's for example.