Large textures can be automatically mip mapped down for older cards.

Textures are created in D3D usually using the default memory pool. This means they are loaded into video memory. But if there is not enough vid mem, they go into system mem... and then paging is quite fast also because of AGP .. so in general, unless you are using wayyyy too many textures, using a number of large textures is fine. you may get some slight jerks, but make sure that not all 11 2048 textures are visible at the same time...then you will get massive framerate slowdown even on fast cards.