In which way Blitz3D can use DDS textures?
Like you would use any other textures for your models - Fredborg even made a tool that can replace .TGA references inside old (before .DDS support made) .B3D models to .DDS so that when you load a model it automatically uses compressed textures instead of .TGA.
.DDS isn't the best choice for everything, like smooth gradients and menu background images and such. But I'd recommended using it for game model/enviroment textures.