Dxt is fundamentally different from JPG though. It's a block compression scheme, each 4x4 pixel block is compressed separately. Assuming you aren't changing the colors at all, there should be no.loss.
Made a quick one. Quakes pixelated grit speaks to my heart, i hope i'll be able to give it what it really deserves. model Couple more highpoly shots at the Artstation
Make your own material and use the texture coordinate node. It'll give you the UVs per-pixel and you can use clamp nodes or if nodes to turn these values into colours.
I just realized that the UV mapping doesn't seem too even. The handle has far more pixel density than the blade. You might want to avoid that in future projects?
For removing the white, this is a really good plugin for that; http://mikes3d.com/extra/scripting-plugins/killwhite/ Use the PixelBlender version (you'll need to download and install Pixel Blender - links are on the same page).
Do you know how to use the material editor? Go find out how to put a material across the whole screen (postprocess material) and how to read the depth at a pixel (destdepth).
Thx, tested it now. But it is not what I'm looking for. It is basically UVW position as RGB pixel. I doubt I could extract rotation from that and map it to that color wheel. On the right is rotated.
This looks really cool! I'm not a huge fan of pixel art but the mechanic is simple and neat which makes me wanna play it. And that boss at the end! I definitely want to see more.
Your UV's have a TERRIBLE pixel ratio. Some shells are too big, some are too small. You want ALL your checker squares to be the same size, and... well... square.