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I'm thinking about texture atlas generation where I'd have to choose the dimensions of my atlas, constrained both by my sprites and by the maximum texture size of the current platform.
Given that, is there any drawback to using a rectangular texture over a square texture, assuming the dimensions are still a power of two? For example, is there a difference between using a 64x256 texture and using a 128x128 texture?
Short answer: no, there's no drawback.
In early 3d hardware there used to be some aspect ratio limitations, where you could do 32x256 or 256x32 textures, but not, for example, 256x4. I have no idea why this limitation existed (probably to simplify interpolators or some such), but current 3d hardware has no such limitation.
Do note that small levels of mipmaps may act slightly differently in non-square textures (as an example, 64x8 - 32x4 - 16x2 - 8x1 - 4x1 - 2x1 - 1x1, I believe).
