Day / Night cyles in Torque

Every once in a while this issue is coming up here in the forums, but nobody has been "officially" working on this topic it seems... so lets kick off the discussion here how it could be achieved... this topic is also part of the Temporary Torque TO DO list, so I guess GG itself would be interested in getting this done ;-)

Some guys have submitted a devshot showing their day-/night cylce engine here, but they didn't say anything how it's done and didn't post any resource or something yet...
We've started discussing this issue in Melv's lighting thread, here are some quotes:

"... you'd have to change the generated lightmaps at runtime to use the current lighting system, i guess... and I also guess you'd have to change/overlay the skyboxes, and do a million other things to make it really realistic... Morrowind is doing these transitions amazingly, they have beautiful nightly settings, etc. but I've got no idea how it's done..."

"As you've mentioned there are so many things that would need to change, all of which I could see methods of achieving but the one that I'm not that familiar with is the terrain.
The cheapest/quickest way I could see for the terrain is to remove the lightmaps completely! Yes, I know I'm probably treading on tender ground (sorry for the pun) with some but it would be feasible to remove the light (or more to the point the shadow) maps and bung in a normal dynamic omni light when rendering."

So if anybody has something to contribute, some wishes what should be implemented, a great idea how to achieve it, etc., post it here... ;-)