There are a few different layers involved in LT's lighting support. The base layer involves lights that level designers have placed in the environment. These create spotlights and shadows. Time of day is applied onto that either using gouraud shading or an additional set of lightmaps. Runtime lights are easier to create and use, but don't cast shadows.
Precalculated lights can get some amazing effects but are harder to implement.
Noticed over on Bot Epidemic that someone who goes by Coffee posted a new tutorial at the AI Cafe on Fuzzy State Machines . You'll find more bot-related AI tutorials at the AI Cafe as well. 3DGPU posted a comparison article which takes a look at S3's S3TC texture compression and 3dfx's FXT1. Version 0.13 of a project called AutoTrace is now available. The aim of the AutoTrace project is the development of a freely available application similar to CorelTrace or Adobe Streamline.