Operation Flashpoint: Pal2PacE
Pal2PacE is a command line tool for texture conversion. It is included in the Oxygen2/Visitor2 release packets.
You need to use it on the same directory as O2/Visitor2 or copy the Pal2Pac.dll file into the dir where you placed Pal2PacE.exe program itself.
If you want to create island wrp transition tiles, pal2pace does it nicely for you. You need to take the terrain types as TGA files and run the program with this command line:
pal2pace -combine t1.tga t2.tga t3.tga t4.tga t1t2t3t4.paa
There you see four different terrain types; t1, t2, t3 and t4 types, which are now combined into the t1t2t3t4 texture file.