My original post was directed at the irony that alot of people believed that EQ 2 was using SM 3.0 because of Sony and Nvidia's heavy promotion of the game upon release. Despite neither company making a claim to the game being SM 3.0. Part of my chuckle was internally related to what I remember going through 4 and half years ago in regards to this subject. As I said. In Hind Sight. I regret dumping the shader code. Though it probably would have come to light eventually. It gave alot of people the wrong impression as to why EQ was having performance issues with Geforce 6 cards. Which was unrelated to the shader code.
For anyone who's actually interested in the topic at hand. Regarding EQ 2's use of SM 1.1 and how it has impacted their lighting models. One of the EQ devs has been very kind to discuss it in rather good detail.
It's very interesting because he talks about how EQ 2 was built from the ground up as a SM 1.1 game. And the engine is partially limited by it. And how the SM 3.0 upgrades will primarily effect lighting and light sources from your charactor. The beauty of such a change is it will likely have no impact on a modern GPU's performance at a moderate resolution. 1680x1050. Due to the fact that the pixel shaders are not the games primary bottleneck. For most people this will be a quality gain at no performance cost. And on some hardware there may be some minor speedups.
He also goes into the possibility of introducing geometry instancing into future foliage. Which could improve performance in some CPU limited scenerios where foliage is a culprit for hurting performance. This is likely the biggest spot where you'll see performance benefits.