Best Dynamic Lighting method for levels?

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Anyone who uses the word "wit" is looking for a good ass-kicking. What are you, British?

BL, I use multipass and 2 surfaces interchangably, since they are really the same thing. Using 2 surfaces in one pass does give a little better results when z-fighting is an issue.

You have the right idea with BSP. Just use a point-plane distance function to see if the light affects the plane, then offset and scale the light texture to fit the setting (faster than changing UV coords) and render a copy of the plane. It's really fast, and works fine for big maps. You probably only have a light calculation every other second, and maybe a couple of moving dynamic lights.