Yafray can use all Blender mapping types, not just uv. For bumpmapping you might need to increase the nor level a bit more than you would for Blender, depends on the texture a bit.
Ok, I got something, but why does the setting have to be so high and which UV setting is it being set by ? And is UV mapping really needed ?
Ok, now that I have the bump down, how do I use the blend textures to blend out the bottom area ?
Just set it to calc alpha, and in materials turn on the alpha button over on the right, and turn on ztransp and turn down the alpha slider.
But if I turn down the alpha slider the whole texture becomes transperent and were should blend be, before the image or after it ?
here’s a blend with the settings. I guess you can’t set a blend texture to calc alpha, but it seems to work nonetheless.
http://home.att.net/~zolgnar/blendalpha.blend
Ohhhhhh pretty, well I did as you say but it seems half of the tree is missing 
Thanks for trying anyways, I guess I’m going have to cheat and draw an alpha map 
Ohhh you just wanted the texture to be affected,…ok,…no problem, just set the blend layer to stencil instead of alpha.
<edit> erm, turn ztransp off too.
<edit> the blend texture goes in the middle of the textures you want to be blended. all to one side will take the one half, and all texture channels on the other side will be displayed on the other half.
Not the whole texture, just the bump map.
then put the blend texture second to last, and make the bump map the last texture.
OMG it works !!! Thanks Modron, you’re wonderfull 
coolio. now that it works you can adjust the offset and size in the mapping menu of the blend texture, for the y coordinate, to determine how crisp the transition is, and how far down the trunk it starts.
Yup hehe