TC_Default should work fine but you need to convert your normals from 0...1 to -1...1 space manually, x*2-1 or (x-0.5)*2. http://abload.de/img/dxt1normal029fju1.png
All engines should support it. The UV sampling goes from 0-1 in both U and V directions You simply lay it out on a 2:1 space, like from -1 - +1 U and 0-1V then scale all the UV's by half (0.5) on the U axis and put them back into the default 0-1 UV space. IN your program they'll look stretched but they will read a 2:1…
yeah, this isnt really specific to UE3 and if you set your compression type to TC_Normal map on import it will do this automatically. The reason it does this is textures go from 0-255 but normal maps represent a vector in each axis, and the vector can go from -1 to 1 so you have to unpack those channels(Axis) from 0-1…
No worries, it's not always easy to understand how they work. Normal maps are the angle a surface is on, so you can work out the normal using the height but the normal doesn't include the height. It's not so much the blur, it's more the gradient. Blurring makes a gradient, but any gradient will do. If you remember from…