Well, Zbrush 3.5 has the scales brush, so that plus a nice alpha and some brush modifier tweaks would be my guess as far as sculpting. The rendering methods are anybody's guess.
Pior, I wasn't talking about ZBrush workflows, I wouldn't use ZBrush for something like this because it would be so many polys to get something looking "solid" and not "soft"... I'm talking about using proper instanced geometry in your 3d app and deforming it as Bryan Cavett's links showed. Way faster and still nice and…
I believe.. although I haven't tried it myself... that in ZBrush if you have UV'ed your base mesh you can project a texture onto the mesh as alpha/mask. Using the deformation tools you should then be able to manipulate the geometry to what you want. I do remember seeing a video of the workflow but I've completely forgot…