As I understand it, the .mdl will have been created to call for either, .dds or .bmp textures. To change them may result in a delay finding the required texture file.
FSX knows to use .dds files if it can't find .bmp files.
The only time you might have problems, and even then I think it will work, is if the model calls for .DDS and you have .bmp files. I am sure I have used FS9 repaints on FSX native models without converting them to .DDS.
As for Falcon's batch file, I think it important to note that you may get some unexpected results.
As an example, if you use it on textures that have mipmaps they will be removed by running the batch file.
Also, if you have 32 bit textures they will be compressed and you may lose some quality.
If your .bmps are DXT1 and you process them with the batch file they will double in file size, without any gain in quality.
All of these could have a negative impact if you process a bunch of AI.
The only difference between FS Extended Bitmaps and .DDS files is the flipping. With today's modern GPUs I doubt you will see a noticeable difference in performance by converting the textures.
And Keith says he uses DXT5 for FS9, DXT5 will crash FS9.
cheers,
Lane