Art Standards and Conventions
1 large blender unit = to 1 meter
The palette does not really matter because Crystal Space calculates its own optimal palette given a set of input textures. But there are some things to keep in mind. Try to get the number of different colors as low as possible without sacrificing for quality and if you design a set of textures that are meant to be used together it is always best to let them use a similar palette. This will make it easier for Crystal Space to calculate a good palette.
The width and height of a texture must be a power of 2 (such as 8, 16, 32, 64, ...). That's about the only restriction. Textures need not be square. You can have textures with sizes like 16x256. If a texture does not conform to the above mentioned limitations then it will be scaled. This may mean that there is quality degradation though!
Textures should be 4096x4096 or maybe we will go bigger so make them bigger because it is easy to reduce them in the end but very hard to make them bigger.
2049x2049 pixels for heightmap but together with that, to get seamless terrains, the border pixels must be repeated
For more details see: http://www.crystalspace3d.org/main/ArtistBestPractices_Tutorial