it looked pretty cool, didn't it?

Edit2: Thinking about it more, there may be a bug with -img2dds in the D3D code. I haven't checked this for sure but it was all a little freaky at one time and held up the final commit for weeks. It's possible that there is still a bug there and I just didn't catch it during final testing. I don't use D3D though (don't run Windows) so it's not something that I give a ton of testing like I do for OpenGL. The problem could be related to Direct3D in general on your system or (more likely) a bug crept into the D3D -img2dds compression code. I'll try an grab a good test system to try it out on this coming weekend and give it more testing. For now you can just stay away from -img2dds or try using it with OpenGL instead.
eh, about that, OpenGL doesn't run entirely stable with FSO for me, while it works with games that need at least a gig of system memory to run at full strength (and double my current video card RAM), and i can run that almost perfectly in OGL. i'll give it a shot later today though.

(and it was awesome to see uncompressed images.

)
Cobra, I know you've posted them before, but what are your system specs? With the consistancy that you seem to be able to reproduce this effect, I'm wondering if img2dds isn't causing some funky collisions with what I am assuming is a less-than-optimal amount of system memory.
I'm barely able to play FSO:
Intel Celeron Processor (and a stock motherboard, so it's intel celeron motherboard, too)
2.7 GHz
256MB DDR RAM
64 MB on a GeForce MX4000