Yes you would use lights to create a glow effect. I am no artist and have no idea about colouring etc, so I'm amazed I can do these things
Using dynamic lights you could also create a light that flickers. Making it look like the fire is generating this effect. I'll see if Lee is up to making me a specific AI routine to control the light effect (best if I ask him when he's done fixing bugs).
OK, here's a screenie from a sample game that will ship with EA. Lee is making this game.
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