That texture pack is nice, but I think it would cause more confusion than any pack I use - especially if we do a CTM map; how are we supposed to know which wool we've got? I know, mouse-over and a name pops up, but still. I think it would be disorienting, unless a particular map were built with that pack in mind. Cool pack though.
I've been using the LB photo-realism RPG pack, here:http://www.minecraftforum.net/topic/127377-16x-32x-64x-128x-256x12-lb-photo-realism-124-update-3292012/
Do you have a 64 bit version of Java? In the first post they mention that windows automatically downloads the 32 bit version of java, even if you have a 64 bit system. That may be your problem - they outline how to get the 64 bit version in the link above. They also recoment increasing the java heap size (doubling actually). I don't know if that would help, but it's worth a try. It's one thing if you don't like the high res packs, but it sucks if you want to use them but can't. Hopefully this helps.
While there are 16x16 versions of the original LB photo-realism pack, the lowest res of the RPG pack is 64x64.
If none of this works we can keep looking for a texture pack that works for both of us. As to the map, as I posted above I would like to start off with Sunburn Islands (it's part of Vechs' super-hostile series). If you want to do the war thing one of his race-for-the-wool maps would be cool - they are full on pvp, tnt cannons and all.