Fluid00

Also my only real comment on the environment vid: The "debris" from the waterfall seems way to dominant, looks a bit like a tool employed as a mechanism to hide the edge/collision between the water falling down, and the still water in the lake. However I am not sure this is something that would be easy to solve with the 2.5D constraints currently employed.

Well you do not need 3d to have dynamic lightning. You just need 3d information for the lights. This means that you will have to model it in 3D, render out "normal maps", and tell the lights in the scene(in unity or whatever engine) to use them. This is normal maps: http://en.wikipedia.org/wiki/Normal_mapping This is a video from youtube that shows an example: http://www.youtube.com/watch?v=f31sC52j7Po