Heres a step by step by me.
1.You need an emulator. (project 64 or 1964 are recommended).
2.You will need a mario 64 rom. (in my case)
3.You will need a Rice daedalus video plugin. (make sure its v6.1.0 or higher)
http://www.emutalk.net/showthread.php?t=26229
When you download Rice, you should also get something called BMGlibPNG.dll, place this where all your emulator stuffs are in.
Setting it up....
When you download the emulator, save it in :C/Program files.
Now in program files, you should see a folder named plugins. Put your Rice in that folder.
Make a folder and name it hires_texture (exact). Place hires_texture where all of your emulator stuff are in. And in that folder make another folder named Super Mario 64.
Next, download my pack and place all of the files in Super Mario 64.
Playing with my pack....
Start up your emulator.
Click on settings and make sure you change the video plugin into rice.
Then load your rom and start playing Mario 64 my style.
for editing, you need image editors, I use photoshop, but there also GIMP, its free and its really good. When saving the images, make sure u dont change the name of the original.