I've just stumbled upon an interesting video showing off materials blending in UDK (http://www.3dmotive.com/training/udk/advanced-mesh-paint-with-udk/) and I was wondering how such an effect could be implemented.
There are two ways that this could be accomplished I can think of.
First is to render the mesh twice and use alpha blending. One mesh would be rendered on top of the other one with alpha blending turned on.
The second way would be to render mesh once, with both materials computed in a single shader and lerped at the end. That would however require some materials generation system.
Which solution do you think UDK uses? Does it render mesh twice, or does it use its internal material system to combine component materials?