Setting up Dolphin for modding

Introduction

This tutorial will guide you on setting up Dolphin to run a modded copy of the GameCube version of Battle for Bikini Bottom.

Latest release of Dolphin Emulator (make sure you get the latest development build, NOT 5.0 stable)
A copy of the GameCube BFBB ISO (if you have a modded Wii, you can dump it from the GameCube disc with a homebrew application)

Launch Dolphin and add your BFBB ISO to the game list.
Right click the ISO on the game list and select Properties. Navigate to the Filesystem tab.
Right click the root of the disc (first item on the file tree) and select Extract Entire Disc. Create a new folder and wait while the disc's files are extracted to it.
In your new folder, there should be a folder named "files" and another named "sys". Make a copy of both of these, to serve as your backup.
Open Dolphin's Config and open the Paths tab.
Click Add and add the path to your extracted disc's "sys" folder. Make sure to have "Search Subfolders" enabled by clicking its checkbox.
Now, you will have two instances of the game in Dolphin's game list. One of them should have the default GameCube ISO size (1.36 GiB) and the other should appear to be empty (0.00 B). The empty one is the game that corresponds to your extracted files.
Test to see if the extracted game runs properly. If you want, you can remove your original ISO from the game list, just so you don't accidentally open it thinking it's the extracted files.
Now you can run your game from an extracted filesystem! This means you don't have to rebuild the entire ISO if you make changes to one or more of the files.
If you mess anything up while editing (such as accidentally corrupt a file), you'll have your backup to get the original files from. Even if you mess your backup up, you'll have the original ISO to extract the files from again!

This guide will actually work for any Wii or GameCube game you may wish to run from extracted files.
Any changes you do to the extracted files (such as replacing a HIP file) should apply immediately. You do not need to close the game and re-open it for changes on files to take effect if the file size has not changed; so if you only moved assets around, reloading the level is enough to see them. But if you've added or removed assets, you must close the game and open it again (or else it'll crash), and using savestates will not work (as a savestate counts as continuing from an already open game).