Now, I would like to know where I would end up putting these mods for testing and debugging?
Go here (assuming default install path):
C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods
You should see a default folder. Copy it, rename the copy to "my wicked mod", and then open the file inside using notepad called "ModDescription.xml".
Change the description from:
"This is a generic mods folder for casual mods."
To:
"This is my wicked mod!!!!"
You should be able to go to game options and find your mod there. You have to select your new mod, and turn on mods before you can use it.
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Any ways, back to the folder.
You should find a folder called "Data". Open it up. There you should find a bunch of folders. If you put your files in the proper folder, your stuff should add to every that currently exists. If you were to add the stuff without putting it in its proper folder, it should overwrite the appropiate material.
So now you know how to "add to" and "overwrite" existing material.
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I hope this helps.