I've seen several people having a prob installing this so maybe a tutorial might help.
First, copy your GTA3.img AND GTA3.dir files and paste them somewhere. I have mine copied into my skins folder. Why you ask?
Because if something gets fucked up you can replace the ones your modifying in your models folder with these. You will need BOTH files backed up.
Now make a folder, anywhere, called anything and extract all the files for the Realistic Roads to this new folder. Open the Readme.txt. Here is the list of the files you need to change. Open your GTA3.img in your models folder.
Now you should have the Readme.txt and the GTA3.img open side by side. Using the readme.txt, scroll through your GTA3.img and as you find a file that needs to be changed, left click to select it. Then right click and choose DELETE. DO NOT choose replace. Click YES and move down the list. Make sure you only delete ONE file at a time. I've seen IMGTool screw things up when you try to do multiple files at once.
Once you've deleted all the files you need to change out close the Readme.txt. Open the new folder you created and extracted all the new files to. Delete from this folder the Readme.txt and the 6 JPG files. That should leave you with 56 files.
Replace the Generic.txd file in your Models folder with the new one. If you only copy it and don't drag it there
you will need to delete this file as well from the folder. You should now have 55 files left.
Go back to the GTA3.img file you should still have open. Click on "Commands" and choose ADD. Locate the new folder with all 55 files and highlight them all. Click "open" and they should all go into the GTA3.img. Once it's finished adding them, click "Commands" and choose "Rebuild The Archieve".
That should do it. Hope this help out.