http://www.polycount.com/forum/showpost.php?p=1115091&postcount=156 this is probably the best method I have seen. http://cghub.com/scripts/view/79/ << slideknit is available here
MAG for the 256 players, would have liked being part of the beta. Bayonetta, got to play the demo first to get a FEEL. There will be some games that i haven't thought of yet.
but wouldn't dilation also fill it entirely? just create an action with toooons of dilation and done, i guess in any case 256 pixels should fill even 4k maps ^^
The texture size seams a bit high for the amount of detail you currently have and the amount of screen space the knife would ever use in a game. Would go for a 512 or 256.
When I work on really low-res textures (256 down to 128 ), I use bilinear instead of bicubic; it's noticeably sharper and you don't lose as much detail.