scali just mixes up the fact that DXT for normal maps can get used in different ways..
in the 2 component way, DXT5 can give quite high quality results. but 3Dc beats it by far (as it's designed for it).
in the 3 component way (or even more), DXT5 leads to quite much lower quality normal maps. even while NOW, you could store the full normal in, even unnormalized.
but you should not forget that, for 2 component compression, 3Dc wins. for everything else, only DXT5 is a valid option.
but anyways, if you don't want additional information the way scali want it (for reasons that are at least questionable, as discussed yet), then you can use a 2 component representation. in THIS CASE 3Dc ALWAYS wins.
3Dc is _THE_ compression format for 2 component textures, with _INDEPENDENT_ texture components.
DXT5 is useable for the same purpose (with the green/alpha trick), but not as good. DXT5 is as well usable for up to 3 _RELATED_ components, and one independent one.
now to choose whats good for normal maps, thats a whole different question.
i'd stay with 3Dc and the green/alpha hack if not supported.
btw, scali, even nvidia suggests nearly everywhere the 2 component way. it's _the_ way introduced in gf3 days with the HILO formats. not compressed, but with auto extraction and renormalization of the 3rd component. and this was all just for bumpmapping!
so the whole texture_shader unit can get dropped for bumpmapping, too..