Is there any way to have the whole layout split into a grid with its own X and Y values? The grid would obviously be made of squares bigger than a single pixel.
Do you just want to show a grid, or display objects snapped to a grid?
Snapping to a grid is easy, just set every object's X and Y to:
round(Object.X / 32) * 32
round(Object.Y / 32) * 32
where 32 is the size of the grid cell.
Just another quick question, if the objects are snapped to a grid, if an object is one cell above another (say obj1.y=1 & obj2.y=2 on the grid) would they still be considered touching (for any collision events)?
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I'm not sure, try it and see. You might want to compare positions directly instead of testing for collisions anyway.