Ok, so been playing with graphics 2.0 effects and been playing around with normals maps and point light, which is great fun. I can see some nice things that can be done with this but abit unsure of exactly how far one can push it. Only done some simple testing for now with not too many objects:
http://www.youtube.com/watch?v=OoogDhu-L8U
somehow the mousepointer got offset and the quality is abit bad so I really need to find another screen capture software. Using screenior now but its abit buggy.
in this video the background is 2x4 images, since I noticed that the size of the object also controlled the size of the light. Then there are 2x8 stones, making it a total of 24 objects with the effect. Then there is the “player” object in the middle and I have some 12x “shadow” rotating around him. This runs smoothly on iphone 4s so far.
As it is now from what I understand, each object/map has its own light so you have to move and adjust the light for each object with the filter… what you be great was if one could have the lights as seperate objects like in 3D apps. Will have to dig abit deeper and maybe see how far one can push it 
Anyone else playing around with this?