"-nowic" fixes this Invalid paramter 80080057 error, which is apparently a wine bug in windowscodecs.dll (specifically, in GenerateMipMapsWIC or its preconditions). I'd hypothesize it's somewhere between this and this (it happens with both DXT1-5 and BC7). Latest texconv or texconvx64.exe doesn't change anything.
[00:00:56.852] Creating atlas 4096x4096 with 38 textures
[00:00:58.596] reading C:\steam\steamapps\common\skyrim special edition\DynDOLOD\DynDOLOD_Output\Textures\Terrain\Tamriel\Trees\TamrielTreeLod.dds (4096x4096 B8G8R8A8_UNORM 2D) as FAILED [mipmaps] (80070057: Invalid parameter.)
[00:00:58.918] [Tamriel] Trees LOD generation error: Executing TexConv returned error 00000001: "C:\steam\steamapps\common\skyrim special edition\DynDOLOD\Edit Scripts\Texconv.exe" -nologo -y -sepalpha -f BC7_UNORM -bc q -o "C:\steam\steamapps\common\skyrim special edition\DynDOLOD\DynDOLOD_Output\Textures\Terrain\Tamriel\Trees" "C:\steam\steamapps\common\skyrim special edition\DynDOLOD\DynDOLOD_Output\Textures\Terrain\Tamriel\Trees\TamrielTreeLod.dds"
[00:00:58.963] [00:34]
[00:00:58.963] [00:34] Exception in unit userscript line 255: [Tamriel] Trees LOD generation error: Executing TexConv returned error 00000001: "C:\steam\steamapps\common\skyrim special edition\DynDOLOD\Edit Scripts\Texconv.exe" -nologo -y -sepalpha -f BC7_UNORM -bc q -o "C:\steam\steamapps\common\skyrim special edition\DynDOLOD\DynDOLOD_Output\Textures\Terrain\Tamriel\Trees" "C:\steam\steamapps\common\skyrim special edition\DynDOLOD\DynDOLOD_Output\Textures\Terrain\Tamriel\Trees\TamrielTreeLod.dds"
[00:00:58.963] [00:34]
[00:00:58.963] [00:34] Check log lines above the exception for additional hints. Check the FAQ and search official forum https://stepmodifications.org/forum/forum/223-shesons-dyndolod-xlodgen/ for those errors.
[00:00:58.963] [00:34]
[00:00:58.963] [00:34] If problem persists, post error report with entire contents (not just the last couple lines) of ..\DynDOLOD\bugreport.txt and ..\DynDOLOD\logs\DynDOLOD_SSE_log.txt to official forum https://stepmodifications.org/forum/forum/223-shesons-dyndolod-xlodgen/
[00:00:58.963] [00:34] Error: [Tamriel] Trees LOD generation error: Executing TexConv returned error 00000001: "C:\steam\steamapps\common\skyrim special edition\DynDOLOD\Edit Scripts\Texconv.exe" -nologo -y -sepalpha -f BC7_UNORM -bc q -o "C:\steam\steamapps\common\skyrim special edition\DynDOLOD\DynDOLOD_Output\Textures\Terrain\Tamriel\Trees" "C:\steam\steamapps\common\skyrim special edition\DynDOLOD\DynDOLOD_Output\Textures\Terrain\Tamriel\Trees\TamrielTreeLod.dds"
This class of error still occurs during the run, but seems to be related to IL incompatibilities between normal mono and MS dotnet impl. Most likely this is effectively a wine bug, if it works on windows. This does not disrupt Dyndolod much, but I bet it's not ideal.
Error reading meshes\lod\dwemer\dwefacadetowerarch01_lod.nif from BSA/BA2 lz4: Invalid IL code in <Module>:?A0xbaf7a355.XXH32_finalize (uint,void modopt(System.Runtime.CompilerServices.IsConst)*,ulong,XXH_endianess,XXH_alignment): IL_0007: switch (IL_07de, IL_07bf, IL_0798, IL_0771, IL_0173, IL_0325, IL_04f9, IL_06e9, IL_00e2, IL_0294, IL_0468, IL_065d, IL_0051, IL_0203, IL_03d7, IL_05cc)