I think on most current PCs the game will only use the textures in the texture2 folder - I'm guessing this is due to either:
a. the game not detecting the amount of available graphics memory properly and automatically applying the "low" quality textures; or
b. the option to select texture quality being unfinished / missing in the released version of the game (with texture4 being a leftover).
To get the texture4 ones to show in-game they can be copied into the texture2 directory - replacing the original files (as they have the same filenames). Not all of the textures have a high-resolution version, which is why it's necessary to copy the texture4 files into the texture2 directory instead of just changing the folder names.
Here's a before / after comparison:
Default (texture2): http://i4.minus.com/ibmb0CDegiR25M.png
After texture4 tweak: http://i2.minus.com/inQlXZuCO9lth.png
Editing the textures works the same either way - to make a higher resolution version of an existing texture you'll have to resize it to the desired resolution and work from there (use image filters and/or manually improve details), or create a new one from scratch (use the original as a reference).
I don't have Photoshop available to test this, but you should be able to save your edited textures as 24-bit BMPs as long as you have the image mode set to RGB Color before saving. If textures saved this way cause the game to crash, it might be due to Photoshop applying some type of compression or additional image properties that the game doesn't like - to work around this you could try copying the image out of Photoshop into another image editor like Paint.NET, and then save the file using that.
For the screenshots, I think the lighting might just be due to the map and time of day (Oasis with day/night cycle enabled - was late afternoon judging by the position of the sun in-game). My gamma slider in the options menu is set to about 25%.
Image quality-wise I'm running Machines at 1920x1080* with 32xS antialiasing forced through Nvidia Inspector and 16x anisotropic filtering forced through Nvidia Control Panel.
*The first time I ran Machines with my current setup I had it set to run in Windows 98 compatibility mode, and the game would only allow resolutions up to 1280x960. I tried running it without any compatibility mode enabled and the list of available resolutions in the options menu expanded significantly - allowing up to 1920x1080 to be selected.
EDIT: that turned out to be a much larger wall of text than I expected :p