Ashley , The trick with multiplying the background on top of the lights is clever indeed. However I'm not sure how it will work with multiple layers, like when we want to achieve parallax, or other z ordering effects. To be quite frank, while a tutorial would be very muck appreciated, this looks like a hack, a workaround the issue rather than a proper lighting implementation.
And there is still the problem with the artifacts... If we use adjacent sprites, there is a chasm between them, breaking the effect of continuous surfaces. Please see the following example.
https://www.dropbox.com/s/pl70s7bu4wtib ... .capx?dl=0
There is a workaround with one light by using the alpha threshold effect, but this doesn't apply with multiple lights.
Also, all of the above doesn't cover the normal-bump map subject.
Anyway, thank you for the examples, they are really cool!
ps megatronx , I can confirm that the links do work!