To re-texture an object, you need to do this following.

1. Move textures to a folder inside working folder
2. Open model in O2.
3. CTRL-LMB double click on texture on texture list on the left. ALT-LMB click on top/left view, press E. Now edit path in dialog at bottom right corner to reflect correct path and texture.
4. Repeat for each texture, each resolution LOD
5. Exit

Done ;)

However if you want to use the TxtPathSwap utility by feersum.endjinn, its much easier to swap many paths at once. This util reads only MLOD models, also make note that if you use ODOL Explorer (OdEx) MLOD save, you need to load and save the model in O2 first before using TxtPathSwap because there is something weird on the MLOD p3d from OdEx save.