From DEM to Terrain, any recommendations?

[Johan_Haegg]

i am currently working on a small side-project for a game that I and some friends are writeing in PureBasic.
It will:
Take a BMP generated via DEM2TGA and TGA2BMP, cut it to 1024x1024, map that with a 24bit palette for terrain texture, possibly use a randomization to give the texture a bit more life. Then again take the 8bit 1024x1024 and resize it down to 257x257 (or 256x256 and add a 1pix wide black border?)

Does anyone have a function they want to add, and what do you think of this resize algorith:

take a 4x4 block
add the bytes together
divide them by 16
save to sprite
continue with next 4x4 block