AO maps, curvature maps, etc. are very helpful to give models volume, not only dirt. Without a smooth AO applied on the diffuse, a normal map model is like flat when lights kills the fake effect. Realtime AO is still very expensive to compute for graphics cards, and a good prerendered/fixed AO map is very soft like to…
Here's my take on this issue. If your engine supports AO as a seperate bitmap/channel then don't add it in your diffuse. I'm not used to working with UE, but is there a way to multiply this into your ambient lighting? If so then that's probably what you want to be doing.…