IIRC quake 3 did the store as JPEG, transcode to DXT thing.

If your DXT encoder is fast, then the quality is almost certainly terrible. They might look OK on casual inspection, but your game artists will eventually run into horrible 4x4 block artefacts that look like minecraft and horrible green/purple hue shifts (especially in areas that should be grey) and they'll start compensating by increasing their texture resolution, disabling compression, or just nagging you to fix the engine

Look up crunch and binomial. Instead of naively using JPEG, they invent new on-disk formats that are designed to be small but also transcode directly to DXT with minimal runtime cost and quality loss. 

Another avenue is, when creating your DXT/DDS files, you add another constraint to your encoder - - as well as looking for block encodings that produce the best quality, you also search for ones that will produce lower entropy / will ZIP(etc) better. You then sacrifice a little quality by choosing sub-optimal block encodings, but end up with much smaller files over the wire.