No. The RVT is just an information-sink; you can make as dense as you need to. What feeds into it can be whatever (but not a virtual-texture itself).
What you want to set it towards depends on what you want to capture. In my landscape system, I only need the alphas, so for a 2k landscape texture, it’s sized at 12,0,2 When I wanted to capture the actual PBR into an RVT, I tended to use 12,2/3,2.
If your RVT is set to a low-density value then feeding 4k textures won’t really matter.
As far as color density, the docs note there can be drift owing to the compression being used, ensure you are using YCog for your color-space. For blending, assuming you paint PBR information into the RVT, you would sample that in your object-material, create a blending gradient (I usually grab world-height and then height-lerp to the mesh-material. That way it’s the same color as your landscape/heightmesh that is also sampling the RVT.
You can also just dither the edge with stippling of you want ‘soft’.
short vid I found that talks to some of this: https://www.youtube.com/watch?v=zD_IPknrdyM
Also, Tharle is great: https://www.youtube.com/watch?v=PKX_v4RDkPc
For the colorspace, open the texture and make sure the sRGB box is/isn’t checked. I’ve also had odd issues with the material editor where it seems to ‘see’ (linear)color and complain about the default texture provided. In rare cases, I’ve had to delete the texture/sampler nodes and stick new ones it. Point being that if you checked the rest and are still having an unexaplainable error in this context, might just be the nodes (for my experience). It’s happened to me a few times when I had to go through and update color-spaces, so…