AI traffic performance - myths and reality

I should select my traffic directory for "Source Folder", check "include sub-folders", and leave "mask/filename" blank, right? For "resize - largest dimension" I should check 1024, but what about the checkbox for "reduce _LM texture size by half"?

Yes to all.

Do not select "reduce LM texture" as this will resize the AI aircraft's light maps.

Do I need to specify destination directories? What I really want is to replace the original textures in their original directories. That means, I think, that I need to check the "update source" box, right? But then what about the folders specified at the bottom?

"Update Source" -> Directly replace the source files.

The alternative would be specifying a (temporary) directory in the "Other" category (and pressing "continue" in case of an error pop-up). This will place the converted files in the specified directory, retaining the folder structure of your AI aircraft folder.

Checking "Backup Files" will obviously create backups, but I'm pretty sure that you'll have to revert manually (by deleting the converted file and renaming the backup) in case of a botched conversion.

- Edit:

Here's a batch file to create a backup of your current AI aircraft textures.

@echo on
set CURRENTBACKUP="C:\AI_Aircraft"
set CURRENT=%cd%
robocopy /S "%CURRENT%" "%CURRENTBACKUP%" *.bmp
robocopy /S "%CURRENT%" "%CURRENTBACKUP%" *.dds
pause

Copy and paste this into an empty text file, alter "C:\AI_Aircraft" to reflect a valid path for your HDD setup and save it as "Backup.bat". Put the batch file into the parent folder of your AI aircraft (FSX\Aircraft?) and run it.

The batch file will copy all BMP and DDS textures from your AI aircraft folders to the destination directory, retaining the folder structure.

Should make reverting fairly easy.