Hi guys,
terrain: yes, everything is indeed baked into the texture. It really was hell of a job to make the terrains and the guy who did that (along with the lighting, materials,textures and many, many other things

) has done _absolutely_ amazing job considering what techniques were available to him at that time.
the area around the torches and lights look different because there are flares (billboarding sprites) used there - if that's what you mean. It is a pretty common thing in games.
the terrain models were of different sizes and textures used on it ranged, I think, from 512x512 to 1024x1024. I think you can uderstand why we really missed compressed textures that were not implemented at that time.
we could use max. 8 visible lights at once so I did some pretty basic scripting to switch on / off the lights that were not needed based on their distance from the camera and some other conditions that could affect their visibility.
T.