I have always used Terragen to create my skyboxes (skydomes as well, in UE3). I start by choosing a good atmosphere, adding some details like mountains, etc. and then create a camera for each direction (t, b, l, r, etc.) and render them all.
However, i'm curious about new techniques with a more modern toolset. Terragen seems heavily outdated and it's final results are always 2000-ish. Do you guys use Vue or Lumion? Or other tools? What are your workflows?
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I use only masks, and no "real" sky texture
The skydome has two uv channels. One top-down and one "side view" uv map.
The sky coloring is using the side view uvs, and a colored gradient.
The clouds are done with using a simple cloud filter texture from ps, and I made them moving with a bunch of adds and panners.
Here is the package, so you can see the shader from closer, and the sky too in action. I included 2 example maps too. A day and a night template:
https://www.dropbox.com/sh/u7e34xe341z4pnb/j1dLnjB5tQ
I think the positive side of the shader based solution is that you have a lot better resolution, and you can have moving or changing things easily, and its good for day-night cycles.