Nice update, Oboe.
Some issues with nose art are due to the way the engine translates the diffuse map. I'll draw a perfectly straight line and wind up with a random pixel in a completely different spot. Red seems to be the worst, especially near something dark. It's the nature of the beast.
You may consider trying to draw the nose art at thirty times normal size then experiment using multiple software programs to shrink it down. The difference in how they're generated on one program vs. another may cause an improvement as to how they're rendered.
I draw my nose art on a huge .psp file in multiple layers, merge them, rotate to the correct angle, resize, then paste into the diffuse. That gives the cleanest result.
The nose stretching also has its own set of problems as you well know.
Regardless, nice job. You've solved the issues we discussed on skin resolution for this object where the metal is concerned. Looks sharp.