Unzip DTED archive. This should contain one inner directory for every longitudinal band (e.g. w077).
Run the following script to convert to 8-bit GeoTIFF. Mapbox tilesets only support 8-bit.
# Convert all dt0 to GeoTIFF
for file in ../dtedlevel0/**/*.dt0; do
output_file="./$(basename "$file" .dt0).tif"
gdal_translate -of GTiff -ot Byte "$file" "$output_file"
done