It's not needed, but it is a way to guarantee my texture will override his. Copy this resource code into your own resource:
Priority 800
PackedFile Override/*.package
PackedFile Override/*/*.package
PackedFile Override/*/*/*.package
PackedFile Override/*/*/*/*.package
PackedFile Override/*/*/*/*/*.package
Priority 800 can be changed to whatever number, so long as it's higher than the priority number of your Packages folder.
As an example, this is what my resource document is set up as.
Priority 900
PackedFile Awesome/*.package
PackedFile Awesome/*/*.package
PackedFile Awesome/*/*/*.package
PackedFile Awesome/*/*/*/*.package
PackedFile Awesome/*/*/*/*/*.package
Priority 800
PackedFile Override/*.package
PackedFile Override/*/*.package
PackedFile Override/*/*/*.package
PackedFile Override/*/*/*/*.package
PackedFile Override/*/*/*/*/*.package
Priority 700
DirectoryFiles Files/... autoupdate
PackedFile Packages/*.package
PackedFile Packages/*/*.package
PackedFile Packages/*/*/*.package
PackedFile Packages/*/*/*/*.package
PackedFile Packages/*/*/*/*/*.package
Now, as for the override folder itself, just place that in the same spot as the Packages folder, not inside of it.
So basically, in your Mods folder you will have 3 things: Packages folder, Override folder (where you put my retexture) and your resource.cfg.
Hope that's a bit more clear. I know it's a pain in the *** having to download separate files, but Lapiz doesn't want retextures packaged with his mesh. >:
Edit: I just did this up (with a picture), so look here for more details:
http://bringmevictorysims.blogspot.ca/2013/01/override-folder-explanation.html