As far as I'm aware, the PVMX format doesn't require any specific file format, so it should be able to use DDS just as well as PNG. DDS has a few advantages over PNG on the game's side:
Better compression ratios (especially compared to GDI+'s default PNG support).
Built-in mipmap support, removing the need for the game to generate mipmaps on load.
Hardware decoding, further reducing load times.
Of course, the one downside to DDS is that it is a lossy format. In theory it shouldn't be too noticeable in game (and the games' default texture formats were already lossy). This can be worked around by having users do WIP work using texture packs, and only generating a PVMX when they're ready for release, or by making DDS textures an "opt-in" feature.
As far as I'm aware, the PVMX format doesn't require any specific file format, so it should be able to use DDS just as well as PNG. DDS has a few advantages over PNG on the game's side:
Is there any reason why we shouldn't do this?