This is just too darned useful to let slip away.
For the cheap at heart (no photoshop), the .dds conversion to .bmp tool I use is DXTbmp.
Direct link to app:
http://www.btinternet.com/~mnwright/programs/dxtbmp.htm, but be sure to look at the whole of the site,
http://fly.to/mwgfx/ as it has a lot of useful stuff.
From the .bmp file, I use GIMP (which is no-cost) to tinker with skins and then DXTbmp to put it back into .dds.
While not perfect - I get some pixellation here and there - it is definately "gooder enough" for my tastes.