I take it that you can't use a regular Omni light along with a lightmapped level then correct?
By default, that's correct.
And if this is the case and all, Why is this then?
Because Gile[s] - like most lightmappers - enables fullbright on all lightmapped objects, which stops any blitz lights from affecting them. You've already applied light to the objects. If you were to allow Blitz lights to affect the objects again, you would effectively be doubling the intensity of your lights. The idea is to have Blitz lights to light non-lightmapped objects so that they match the lightmapped objects. If you were "double-lighting" the levels, the characters would only be single lit, and would still not match.
If you really, really want dynamic lights, you would normally use only dynamic lights and no lightmapping. That's not particularly viable in Blitz because blitz doesn't have per-pixel lighting or shadows. So for Blitz purposes, I would probably be inclined to use a blended sprite/quad like Beaker suggested.