High resolution textures eating performance is a myth. It's not been an issue really since S3 introduced S3 Texture Compression and then Microsoft brought it and named it DirectX texture Compression. S3 showcased a demo running 1024x1024 size textures over a decade ago on 32Mb of VRAM.
While partially true.... High resolution textures do not effect performance at all UNLESS vram is exhausted and it start having to swap like mad to try and keep up.. but usually when this happens with modern systems, you experiencing hitching or complete lack of FPS (dropping down to sub 10fps for example from 30-60 average).
Originally when demonstrating 1024x1024 S3 Textures, there demo wasn't using an excessive amount of them like we see today. For example in the unreal Tournament game, where S3 textures were first introduced in a HUGE game of the year release and only available via the GOTY eddition, and then only initially supported through using "tricks" and some hacking later to get running on later video cards that supported DXTC1 and newer..... there was a limited amout of texture required.... dxtc1 allowed for essentially 1024x1024 textures to consume the same amount as the standard maximum 256x256 textures that were being used for numerous years.
Actually i have the GOTY eddition of UT installed and running with both the S3 pack and additional "hd" textures that can be found to further replace more of the textures not covered by the official s3 pack.
Currently, I'm testing a raised cap of 4096MB (iMaxAllocatedMemoryBytes=4096000000 on skyrm.ini) as I've got 6GBs RAM on a Win7x64 machine. I'll see how it goes.
BAD... DO NOT TOUCH THIS value... the max allocated memory bytes solution was a modifiable value in oblivion and an argueable one that.... it was never intended to have a value that exceeded the 32bit limits let alone sat on that, it actually can increase CTDs or issues due to allocating memory it doesn't need at all.... with it removed it should automatically adjust depending on the requirements needed. Most likely the fuction doesn't do anything, but there are confused/mixed reports of it working/not working. If you feel you must have something don't exeed 1.8gb at most.... personally i run without it after having toyed with it for a few hours at different sizes and found without it was just better.