From looking at your hmp, it looks like you put the skin with the alpha channel first instead of third. If so, that needs to be changed. Also, when I pasted the code that I'm using over yours it worked. Here is what I'm using:
Code:
material mat_terrain_multitexture
{
effect=
"
texture entSkin1;
texture entSkin2;
texture entSkin3;
matrix matWorldViewProj;
matrix matWorld;
matrix matWorldView;
vector vecSunDir;
vector vecDiffuse;
vector vecAmbient;
vector vecLight;
vector vecFog;
vector vecSkill41;
technique multitexture
{
pass p
{
texture[0]=<entSkin1>;
texture[1]=<entSkin2>;
texture[2]=<entSkin3>;
magFilter[2]=linear;
minFilter[2]=linear;
mipFilter[2]=linear;
zWriteEnable=true;
vertexShaderConstant[0]=<matWorldViewProj>;
vertexShaderConstant[4]=<matWorld>;
vertexShaderConstant[8]=<matWorldView>;
vertexShaderConstant[16]=<vecSunDir>;
vertexShaderConstant[17]=<vecDiffuse>;
vertexShaderConstant[18]=<vecAmbient>;
vertexShaderConstant[19]=<vecLight>;
vertexShaderConstant[20]=<vecFog>;
vertexShaderConstant[64]=<vecSkill41>; //(u_scale1, v_scale1, u_scale2, v_scale2)
vertexShaderConstant[95]=(0.0f,0.0f,0.0f,0.0f);
vertexShader=
decl
{
stream 0;
float v0[3]; //position
float v3[3]; //normal
float v7[2]; //uv
}
asm
{
vs.1.1
m4x4 oPos,v0,c0 // transform position to clip space
mul oT0.xy,v7.xy,c64.xy // output scaled uvs - stage 0
mul oT1.xy,v7.xy,c64.zw // output scaled uvs - stage 1
mov oT2.xy,v7.xy // output uvs - stage 2
m3x3 r0,v3,c4 // transform normal to world space
dp3 r0.w,r0,r0 // renormalize it
rsq r0.w,r0.w
mul r0,r0,r0.w
dp3 r0,r0,-c16 // normal.light -> lighting constant
mul r0.xyz,r0,c17 // modulate against material diffuse color
add oD0.xyz,r0,c19 // add environment light
mov r1.w,c20.w // r1.w=1
dp4 r0,v0,c10 // distance to camera position
add r0,r0,-c20.x // distance-fog_start
mad r0.x,-r0.x,c20.z,r1.w // 1-(distance-fog_start)*(1/(fog_end-fog_start))
max oFog.x,r0.x,c95.w // clamp with custom max value
};
pixelShader=
asm
{
ps.1.1
def c0,0,0,0,1
tex t0 // sample t0
tex t1 // sample t1
tex t2 // sample t2
/* lrp r0.rgb,t2.a,t0,t1 // blend t0 with t1 using the alpha channel of t2 */
mov r1,t1
lrp r0.rgb,t2.a,t0,r1 // blend t0 with t1 using the alpha channel of t2
+mov r0.a,c0
//add r0.rgb,r0,t2_bias // add(signed) rgb of t2
mul r0.rgb,r0,v0 // modulate with diffuse vertex lighting
};
}
}
";
}
action terrain
{
my.skill41=float(10);
my.skill42=float(20);
my.skill43=float(5);
my.skill44=float(10);
my.flare = off;
my.transparent = off;
my.albedo = 0;
my.material = mat_terrain_multitexture;
}
. 
