This is rapidly becoming one of my favourite mods. I love the fact that when I pass a crowd of animals they are all different rather than cookie-cutter copies of each other.
The mod takes a little bit of initial setup as you need to gather the textures and ensure the directory structure is correct before processing them. However, the guide is clear, concise and very helpful. The mod page also includes links to several compatible texture packs, all of which appear to be lore friendly. Having said that, if you have a texture for a pink mammoth then that can be used as well :D
The author states that this is still in alpha status, but it already feels like a polished item that does exactly what it says on the tin. At some point in the future it is also going to include the functionality to mix models as well as textures.
I haven't fully investigated interaction with other mods, but the only ones I can see it causing an issue with are other texture mods. Having said that, the Bellyaches animal mod has already been converted to AV format and so is fully functional.
In summary, I would fully recommend this for inclusion in STEP with the caveat that some interaction testing be done first.