"Remember the goal is not to overlay two textures, but to use two smaller textures to occupy a larger space" <-- Hmm, didn't know that! :o
Start: http://img408.imageshack.us/my.php?image=p02b4th3.jpg
Single tile: http://img177.imageshack.us/my.php?i...02ftr3tkg2.jpg
Tiled x16: http://img177.imageshack.us/my.php?image=p023tty8.jpg
...and I don't know why it's leaving those tiny seams on the sides. I offset it a million times in different ways, and PS just wouldn't snap the tiles perfectly snug together on the top and bottom edges, maybe the other sides too. :\