This is an awesome guide if you want to hack textures
a veeery short summary:
Method 1:
1. Open your Dolphin Emulator and go to Graphics -> Advanced -> Dump Textures
2. Go to Documents -> Dolphin Emulator -> Dump -> Textures -> GALE01
3. Start Melee
4. All
loaded textures will be shown in the GALE01 folder. (meaning if you haven't loaded Pokémon Stadium for example, then the Pokémon Stadium textures aren't loaded and won't be shown in the folder)
5. Save the texture(s) you want to change into another folder or to the Desktop and edit it with Photoshop or GIMP (keep the name it had in the GALE01 folder)
6. Save the changed texture(s) to Documents -> Dolphin Emulator -> Load -> Textures -> GALE01
7. Empty the dumped textures, turn off "Dump Textures", turn on "Load Custom Textures"
I don't remember Method 2 correctly, so instead of taking the risk of writing something dumb I'll just leave it lol
With the second Method you modify the stage/character file itself, so you don't need to turn on "Load Custom Textures" and can send your hack to other people.