The AI scale is the X axis and ranges from 4.1 to 2.8. The PAI is the Y axis and goes from 1 to 6. So top left on the X/Y matrix is where you want to be. So as I understand it UT will plot all the applicants for Chem E on the matrix and then fill the available spots. Just based on comments I have seen on CC I think 75% of spots go to auto admits, 15% to in state review admits and then 10% OOS. Looking at Chem E there are about 750 undergrads, so dividing by four you would think that there will be at least 180 to 200 spots offered. 135 to 150 for auto admits. If you are not chosen for your first major then they put you in with group for your second major. I did not look at Mechanical but I think the number of admits is higher for that.
As to what is a good number I do not know. The fact that they calculate the AI out to the third decimal point probably givens an indication of how competitive it is. I would assume that for two applicants that have the same AI the one with the higher PAI would be chosen. The question is how do they evaluate someone with a higher AI but lower PAI than someone else. That is why the essays are so important. You can get four of the six PAI points for the essays. ECs add a point and then the last point is special circumstances.