Yes Blitz 1.97+ loads DDS.
As you only use masking, yes it resolves the issue.
Are you perhaps using "chunking" or some mesh combination algorithm to save surfaces on your trees? (because depth sorting is done against 0,0,0 point of the mesh, not the actual triangle, which causes this kind of error normally - another problem is too high cam ranges as well. min range <= max range / 10000 on 32bit, on 16bit its far smaller!)
As you only use masking, yes it resolves the issue.
Are you perhaps using "chunking" or some mesh combination algorithm to save surfaces on your trees? (because depth sorting is done against 0,0,0 point of the mesh, not the actual triangle, which causes this kind of error normally - another problem is too high cam ranges as well. min range <= max range / 10000 on 32bit, on 16bit its far smaller!)