lower resolution textures glitch

Minecraft can't handle textures lower than 16x16. Java won't allow it and that is why this is caused. Working as intended.

it did handle it before 1.5 snapshots. there's probably a way to do it now too!

I don't think that the burden is really on Mojang for glitches involving texture packs. While I do think they should (and probably will) address TP issues, it's hard to call third-party content problems a bug. And since the latest snapshots introduced changes to the way textures work, this might have altered the way low-res TPs should be made.
@PokeCanada: I've seen a 2x2 texture pack that worked perfectly. Enough said.

Might be a video card issue. Also, make sure the stitcher created textures with no blank space. You might need to assist the unstitching of textures for these smaller packs.

After checking an issue about edges on HD textures, I had the idea to test textures smaller than 16x16. I used Photoshop to reduce the size of the diamond and ender pearl textures and got the above result. While I am unsure if this is something to be considered for a fix, it is something which doesn't work as expected and is possible utilizing an unmodified game with a texture pack. I hope this gets fixed, but I don't expect it, sadly.

Increase your texture size and scale everything up by two. It will technically be 16x16 but will still look 8x8.

Yes, what Elias said.

Related to MC-7098.

Elias, Anon Ymus, yes, that is a way to solve it, but it is not a replacement for a fix as it defeats the point of using lower resolutions, as now you will not gain any performance boosting (even however slight) that makes people use 8x and 4x, especially on poor hardware.

This issue is fixed in 13w09c. Grum has resolved my issue above that was related (and mentioned this).

yay! fixed!