Okay, I have some questions:
1) Are all the images you plan on editing this size (256x256)?
2) I'm surprised the image is a jpg file, is this what you got originally? Does the program have to output images like this one (black background) or png images with transparency?
3) I've checked a video on youtube and I've noticed most of the lines are displayed in black over white bg, did you get anything like that or is the text color converted by the game somehow?
It looks like the game displays lines of text as the dialogue advances, so we have to respect the line height and the number of lines per image.
1) Not always, actually, from the few images I do get with jPSXdec they're always 256 in height but not width, that one varies from image to image.https://picasaweb.google.com/101579511926372120323/DSXIIISAC3Gallery#5975858041494000530
2) It's not a proper rip or anything but a simple TIM viewer and extractor can find these same files and extract them no problem.
Regarding transparency, I doubt the in-game cut-scenes need it as the game cuts the top and bottom of the frame for these segments, and the subtitles are displayed only in the black area without overlapping the game-play area of the frame. As long the text is white on black, there shouldn't be any problem.
Another thing that makes me think that that the black-on-white text images don't use transparency is how with some enhanced emulators you can see how each line of text is its own rectangular image, each with its own foreground (black text) and background (a color very close to the one used by the area where these subs are superimposed on).
However transparency might be used by text which appears on top of the actual gameplay area, usually communications from other characters. I don't have hard evidence for this as I haven't found a way to view these lines or the images where Jp characters are stored.
3) I just can't find these black over white lines, my best results to date are with jPSXdec and what I see is what looks a lot like the in-game white-on-black subtitles.
So in the case of the white-on-black, it seems to be as you say, as long as we respect the height lines and number of lines, those shouldn't prove problematic.
But until someone finds a way to get the two other types of subtitles (in-game green-on-black and pre-/post- mission black-on-white), there's no way I can work on replacing the text. I've tried a lot of programs, to no avail. I'm just a newbie after all.