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View entities are the way to go for this type of system as they can freely move above and below panel layers. The usual 3D level is run invisibly to provide collision detection. (The view entity positions are updated from the invisible level.)
There have been 1-2 long discussions about the use of view entities in regards to 2.5D games. I think it came down to too many limitations vs. level entities. Can view entities actually interact or be scripted to interact with the 3D level (geometry, lights, etc)?
My User Contributions master list - my initial post links are down but scroll down page to find list to active links
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