In fact, now that I look at it and think about it. I am pretty sure that if you take reaper7's sky texture, open it in PS or GIMP, and save it uncompressed with gamma corrected mipmaps, you should get significantly reduced sky banding. However, the sun and moon halos will still have banding. Anyway, I did this a while ago, just follow the link for reaper7's sky fix, with what I did to improve it further. Plus it is already in JSGME format:
http://www.filefront.com/16900155/re...20Sky%20Mod.7z
Cheers fellas, hope it helps you too