N/P. I’m working up a simple web-page to show how to build ‘dithered’ terrain using fewer shaders and textures at the moment.
The page will explain how it works, both with ‘sharp’ dithering and ‘smooth’ dithering, and how to use ‘sharp’ dithering in combination with dynamic lighting. It will also include the ‘costs’ of the technique, and ways to minimize them in some cases.
I also found a way to improve the ‘costs’ of the texturing effect further, making it cost a flat 2 textures per ‘dithering’ effect. I.E. Using a dithering_snow.tga and dithering_snow_invert.tga file, no matter how many surfaces you’re dithering snow onto. This led me to an interesting (and expensive at four shaders, but very pretty) double-dithered effect, appropriate for things like loose snow caught on the rubble of a cliff face.
I do hope you don’t mind the terminology I’m digging up and applying to these techniques? They really are your discovery, I’m just refining it into more verbose, fixed terminology and trying to simplify it where I can. 
Anyways… ETA is somewhat unknown (end of this week, I think?), but the effect is definately very good for things like rust, or patches of snow on terrain, as obvious examples I’ve been beating to death like a horse. If I can find a way to apply the technique to dotProduct2 terrain, that will be something of the ‘holy grail’ of sorts. Though that will require careful parameter selection for the dotProduct2 values, even for a math-head like myself, so it’s probably easier to just manually design that kind of terrain if you’re going to use it with dithering, unless I can get ydnar to add a feature to q3map2 to let us design ‘dithered’ terrain on a 0.0-1.0 Alpha scale, and have q3map2 double that, and split the terrain into two shaders depending on if the terrain is 0.0-0.5 or 0.5-1.0. Making it special-case 0.0 and 1.0 terrain polygons would be nice as well.
Anyways… I’ll post the URL when the page is done and uploaded. 