I was trying out some technique used in other apps to fake radiosity, and this is what I came up with:
You basically place the color bleed on other materials by using a color ramp mapped to an empty.
Here is a great tutorial for LW: http://www.3dtutorials.sk/index.php?id=13
And here is my .blend: http://www.primatestudios.com/temp/faked_radiosity.blend
I would have uploaded a video but it might even be faster for your to render the animation quickly from the .blend than waiting for the video to download.