TXB is Bioware's "custom" image format for Jade Empire. At closer inspection however it turned out to be not quite so custom after all. TXBs are actually a bundle of two files: a TXI and a TGA. The TXI is a plain text file that contains meta-information about the image, which may or may not have been of use to the developers, but is not needed by the game engine. The game engine will happily use a TGA instead of a TXB if one is found in the override folder. The engine does not care if there is a TXI for the image or not. Just delete it!
Converting TXBs to TGAsEdit
TGA (some call it "Targa") is a fairly standard - if old-fashioned - image format that can be opened with pretty much any image editor like Photoshop, the Gimp and surely many others.
When saving a TGA you need to preserve Alpha Channels, set the resolution to 32 bits/pixel and use RLE compression. Here's what the Photoshop dialog looks like: