ahh!!
I think I know why I can't be of much help with this problem.. The method you are using for texturing is far different than what I do.
I texture one very small piece at a time, where you are trying to apply one texture to a large area... When you do it that way you have to make the texture compressed in area's I think so that when the texture wraps around the object it doesn't deform. (If you take a perfect picture like that and wrap it around a cube, it simply will not look good)
Try texturing that square with a black texture with horizontal and verticle white lines on it.. Then, based on the lines you can see how the texture is wrapping around the object that you are working on.
I hope that helps a little...
Asmo