As you might know , arma uses old S3 Texture Compression formats
(P8, ARGB4444, ARGB1555, AI88, DXT1, DXT2, DXT3, DXT4, DXT5)
those are fine for the most textures and stuff
but for the modern standards they are not that good , especially with high poly baked normal maps - with usual DXT5 compression makes it very pixelated and messy + arma uses this nohq for fresnel reflections and the pixelated effect is even more obvious.

Adding the BC5 (original 3dc) format would solve this issue regarding pixelated normal maps (Tangent-space normal maps) , does the work almost like uncompressed format (ARGB8888)

BC6/7 would be nice aswell for high-quality color maps

Unfortunately this will probably require some shaders update to work with new formats but this will be in good way. {F25197}