Hi Rich,

> Question: in the viewport window (native to MoI) - the way the
> geometry is rendered out, you get a smooth transition between
> highlights and shadow - how does this work exactly?

That uses a technique called Gouraud shading:
http://en.wikipedia.org/wiki/Gouraud_shading

Under regular Gouraud shading colors are calculated at each polygon vertex and then when the polygon is drawn an interpolation is used that blends between the colors at the vertices.

Are you possibly doing your shading only with each individual polygon being a separate color? If so then that's the problem - you want to instead use some kind of interpolation mechanism like Gouraud shading or some kind of procedural shader so that color is calculated at a much finer level like per indiviudal output pixel rather than only one color for a whole single polygon.

- Michael