Hmms
Even though you can use Mat16 to make your 8 and 16 bit mats;
another great program is " JKPaint ".
JKPaint not only does the making of 8 and 16 bit mats, but it lets you view animated mats as well, as well as add transparencies to all the cels in the animated mat OR even certain cels within the animated mat. It also lets you make mipmaps as well ( say for example, for creating FOG ).
Ok.
That being said.
Remember, that even after you have your 16-bit mat textures, and you've placed them in the \newlevel\mat folder; you will be able to add them to your new level in JED ... .BUT ... BUT they will not be seen in the JED texture screen as valid ( they will still appear as botchy purple/pink messed up texture). Although, they will appear in JK just fine, once u gob it. JED itself just cant view 16bit textures, nor does it do transparencies and see-thru parts of a mat very well either.
EDIT: Also remember that regardless of 16 bit mat specs, the texture itself must be no larger than 256 x 256 for any individual mat. ( it must be multiples of 2, such as 256, 128, 64, 32, 16 x another multiple ; just so long as neither one is greater than 256 and is a multiple of 2 ).