>Is there a Java compressor source around that I can use to apply to a BufferedImage?
Dunno. Havent seen one yet, but it shouldnt be too difficiult, because the compression scheme is very simple (it has to be since its decompressed on the fly each time the texture is drawn).
Hardware realtime decompression of JPEG and MPEG is common. It doesn't have to be simple because it is decompressed on the fly. It has to be simple to so it's cheap to put on the chip

Nah its different. It gets decompressed each time its needed. Eg if you draw the same texture 1000 times each frame it gets decompressed 1000 times. Decompression happens pretty much instantly during access. You cant do something like that with jpeg.
And yea it needs to be simple for putting it on a chip especially if you put it in the middle of the pipeline like this.
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http://www.chaosdeathfish.com/ddsloader.jarLoads DXT1, DXT1a, DXT3 and DXT5. Doesnt do decompression tho (so it simply wont work if the card doesnt support S3TC stuff).