The diff file idea was a bust. It ended up still being almost 900Mb.
All hope is not yet lost though! I'm in the process of creating an uber batch file that extracts the vpp, extracts the specific str2 billboard files, replaces the textures with the EtD ones, repacks the str2 files, then finally updates the asm files. This way the user just needs to copy his own local sr3_city_0.vpp_pc and sr3_city_1.vpp_pc files (~3.5Gb) into the new mod folder and let the batch do its thang. This means the mod release ends up needing only the new textures and is ~4Mb. I expect it to be done by the end of the weekend.