ello, have a look at the example level. how would you achieve the same texture resolution of the grass for example if you baked everything into one image? you would need a 8192x8192 image or something like that.

baking lighting and shadows requires that the uvs don't overlap. so you can't use tiling textures anymore if you don't have a second uv-set.

@david: how alpha gets handled depends on the material. what would you like to do?