You can do whatever you want. You just have to write shader that does that. Blending of base/normal maps based on base alpha is connected to several other options so I haven't added it yet.
I'm having trouble using the empires parallax shaders (lightmapped, not vertexlit), whatever I do in a map, they are always fullbright and don't react to light at all. I'm assuming they're capable of doing this because they are affected by light in the screens seen on http://www.empiresmod.com/drupal/node/46 Can anyone shed any light on the issue? Thanks
It's a heightmap, you can make a heightmap, which is a greyscale texture denoting the height of the texture at each pixel. Tall bits are white, low bits are black, just plug that into the relevant parameters in the material file as you would anything else. Some textures come with them anyway, a lot of the lost coast textures have heightmaps included, source can actually use them as bumpmaps, bumpmapping being the step below normal mapping, doesn't work as well, but I think it's faster and often easier to make the texture for.