See
this thread for updating the runtime content sample. Keep in mind that anyone intending to use it will HAVE to have Visual Studio installed, and the full installation of XNA 3.1. This also means you can't use it on XBox.
Texture2D.FromFile and Effect.From**** will work even if they don't have the full installation of XNA (including Visual Studio), but will not work on XBox. Also, you don't get to specify processor parameters, and your level editor would highly likely want to use mipmapped textures.