I can't say I'm happy.
Is this something that could be fixed in Blitz or am I screwed?
Now all of a sudden on this PC, it can ONLY handle squares with a height/width to a power of 2 :/
I doubt it's Blitz. Opting for square textures has always been the safe way for developers to ensure compatibility across the widest range of cards - PCIE* is pretty new so maybe the drivers are unambitious and future revisions will be able to handle rectangles? If you're thinking commercially I'd stick with what's safest anyway... there are a number of quirky cards out there (thinks back to the 3DFX card that displayed total texture garbage from Blitz unless it was reset to its factory defaults).
*Or is it PCI-X? [No, it isn't, idiot. -Ed]