This is semi-pruduceral blendshading.
Martinish, maybe you can make it fully procedural 
Video + explaination
http://www.youtube.com/watch?v=vTb1M3T_Qdc
.BLEND
http://www.pasteall.org/blend/2258
It will be in our demo.
thats pretty cool
Pretty neat 
awesome and simple!
Fully procedural is not really necessary, it will just slow things down.
Thanks for sharing.
Thanks for the comments guys!
wow even martinish replied 
Yea fully procedural is a bit exaggerated, but what i meant is non-image based, like in the cryengine.
Here is an example of non-nodes blendshading (just as stencilmap)
http://www.pasteall.org/blend/2264
Let me know what you think!