Jed of wunderboy.org and I have been hard at work these past few weeks writing a LGPL Steam independent .vtf library for Source Engine developers. The library can read and write Source Engine materials and textures with full support for all known features. It is reaching the end of its development stage and will be released shortly.
I've also been hard at work on a simple graphical frontend for the library. This front end, dubbed VTFEdit, can load and save .vtf files as well as create them from various image sources (.bmp, .dds, .gif, .jpg, .png and .tga). It has mip map, normal map and sphere map generation capabilities and supports both multi-frame textures and environment maps.
All i can say is Holy Crap, Very nice i cant wait to try it out.
We're wrapping up everything now so you can expect a release in the next few days (just documentation left really). VTFEdit is only meant to be an example application but it is pretty powerful, so hopefully some users will find it useful. It will be open source like the library. VTFLib should pave the way for a Photoshop plug-in too.
New users can register here.