Quote: Are there plans for easier implementation of .fx anbd cg shaders
You could create a .fx or cg shader using Rendermonkey or nvidia's Cg toolkit and then import the converted Assembler shader into GameStudio. This is not as powerful since the shader is no longer adaptive, but if it's just about ease of programming it would work.
Quote: does displacement mapping tesselate the mesh dynamically?
Yes it does and that's why DX8 has no support for it and Vertex Shaders won't help either (can't create vertices on the fly). On the other hand you could create a simplified displacement mapping by passing a highly tesselated mesh along with a bump map and then displace the vertices in the shader (I guess).
