Back when the gf4 was originally released, we heard from some sites like Tom's Hardware
that DXTC support was fixed on nvidia cards. However, people in the forums posted shots from Quake3 which showed that the dithering in the sky with DXTC enabled was not as bad as it was with a gf3 card, but it still paled in comparison to the image quality of the sky with DXTC off. Now, this discussion was back before the forums were wiped, so I'm not sure how many people remember it.
Anyone with a GeForceFX card, please investigate this issue! Look at the Quake3 sky with texture compression off, then enable texture compression and see if the sky looks the same. Please post screenshots of before/after.
I am very interested in finding out if this issue was ever really fixed or not, it seems like everyone else forgot about it