I had read parallax mapping:
http://www.infiscape.com/doc/parallax_mapping.pdf
Moreover, successfully implemented it with glsl shaders:
Soldier model made by game.exe
I think nowadays this effect, even if it costs one additional texture unit (height map), adds more realistic graphics than usual bump mapping and it is fast enough to be implemented in the next-gen engines.
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POSTED BY DASH ON February 24th, 2006. PERMALINK


Why do need to use an additional texture unit?? You can store your heightmap value in bumpmap alpha chanel.
you should apply your shadows before the parallax pass. if you add the shadows afterwards, theyll be floating around. but its required that the shadows use the same surface as the texture, so: multitexturing. if you use decals for the shadows you possibly cant avoid the floating.