https://developer.valvesoftware.com/wiki/Blender_Modelling_Walkthrough
explains it very well i think :D
the tutorial is for the old skool blender, but the theory is sound and isn't that difficult to translate to the new UI :)
i'm no expert on the subject, but i believe the model is indeed created in an editor such as blender and its texture is 'painted' to the models polygons. The texture is then converted to a flat image by the editor and then mapped back again in the engine (or anything else) via the wonder of UVW...
i think its that vortex VR lens thingy...If it's HL3, ill eat my mousemat :/
im not getting my hopes up either way tbh...i live by the phrase: 'hope for the best, but expect the worst...you'll never be disappointed...'
i fkn love the term 'valve purgatory', it is indeed excruciating. just...