Good evening Quantum Typhoon Z! I’ll try to break down everything you wrote, but I apologize in advance if I’m not clear on my explanations – I’m overtly sleepy now 
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The first thing I want to clarify is what the “extract textures” button do – and why I’ve been wondering if it should be renamed:
- It reads the selected glTF model and searches for image references inside it.
- Tries to find the referenced images (DDS files) in the filesystem. If they can’t be found in the
..\texturefolder, it follows the fallback paths defined at..\texture\texture.cfgfile. - It converts all the DDS files it finds and save them as PNG files at your project’s texture folder.
- It copies the corresponding texture descriptors (“.DDS.json”) and flags (“.flags”) to the same folder.
What should you see on your project’s texture folder? A bunch of files with the following extensions: “.png”, “.dds.json” and “.flags”. They’re the files you’re probably going to work with.
Of course, you may prefer to use a Photoshop plugin or another tool to deal with DDS files, but the presented behavior seems to be more useful to most people, specially those who are beginning to create liveries (like me, when I started this project). Maybe I should add a “collect DDS button” that does not convert textures to PNG? That’s a possibility, but it doesn’t seem to be a necessity right now. Please, tell me if you think different.
This is the first answer to your latest post. There will be more.
PS: I’ve published a new revision today, which deals with texture map creation.