It may be a bit late for this, but I would actually like to point out a paper that was recently released that details the construction of terrain from voxels in the C4 Game Engine (1.5.9, and the LOD algorithms introduced in C4 2.0 that was released a few days ago). The implementation in place in C4 is quite fast, to the point it's quite suitable for realtime deformations of terrain. It details the construction, Level of Detail, material handling for per-pixel lighting, and to some extent the editing tools available in C4 for voxel terrain editing. http://www.terathon.com/lengyel/Lengyel-VoxelTerrain.pdf
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