Never mind the above questions, I should have read the Autogen SDK more closely.

It says right in there that all you have to do is put the DXT1 DDS texture in the FSX/Texture folder.
However, now I'm having another problem. When I assign a custom AG building texture (let's call it Custom.dds) to my autogen in ScenProc, the results look pretty weird in the sim. The upper part of the sides of the buildings becomes transparent. Weirder still, it seems that the higher the elevation of the building, the more pronounced the issue, until at higher elevations no side of the building is visible, only the roof.
Things I've tried:
*Saving the texture with and without a 1 bit alpha (no actual alpha channel is present in the file)
*Resizing the image from 1024 to 512 (has anybody else noticed that the SDK states that AG building textures are 512, but the actual default textures are 1024?)
*Renaming a
default texture to Custom.dds, to swap out my new texture with a tried-and-true default one. Problem still remains.
*Assigning a default texture (BLDM2.dds) in the SETAGNBUILDINGTEXTURE and then naming my custom texture to BLDM2.dds to copy over the default one. After doing this, everything appears fine.
So is this a bug in the way FSX handles custom building texture sheets, or am I doing something wrong? My troubleshooting tells me it must be the former... However, I recall seeing a custom-named building texture in Arno's example of this ScenProc feature, so maybe there is a way to get it working?
-Scott