Good post.
I’ve found the same as you regarding UE5 with Lumen enabled - AO textures are ignored. I’m sure I watched a UE5 lecture, when the EA was first released, that talked about the AO channel being ignored and that Lumen used the normal to generate surface shadows. From my tests I can’t see any difference from a material with or without AO plugged in, whereas the difference was obvious in UE4. Which tells me Lumen IS disabling the AO channel in materials.
In the same lecture they suggested that you could multiply the AO texture over the basecolour if you really wanted to use it - but at that point I’d just add it to the basecolour before I even brought it into UE5.
I think, like a lot of things with this EA, we should wait for the final release to judge. But I’ve never been a big user of AO anyway, though I realise it does grant more realistic surface shadowing.
So for your project it depends what additional textures you’re using. I’d advise setting up a number of ‘master’ textures, then make children of those and / or have master texture nodes. For example my approach is to have a master texture for ‘opaque background’ textures. Opaque meaning that the material doesn’t require an alpha channel, but it also wouldn’t use metallic, emissive, bump or height in any way, or WPOs. And ‘background’ meaning props that aren’t really looked at closely. It’s amazing how much that covers - cliffs, tree trunks, rocks, concrete, bricks, wooden surfaces etc. Then every relevant prop I bring into the game I’d make a new child material and use that for the prop.
For that master texture you could arrange your samplers like this.
Texture Sampler 1
R - BaseRed
G - Normal R
B - BaseGreen
Texture Sampler 2
R - BaseBlue
G - Normal G
B - Rough
Then for props that require more material features (hero props) I’d make a master with something like this.
Texture Sampler 1
R - BaseRed
G - BaseGreen
B - BaseBlue
A - Normal R
Texture Sampler 2
R - Metallic
G - Rough
B - Height
A - Normal G
With the normalZ derived from the nodes shown in my original post. You can swap out the Met Rough Height for whatever you want. Personally I’m going to be using Nanite over bump offset or POM maps (for example I had bump offset brick textures everywhere in my game, but I’m replacing them with actual nanite geometry now), so my second sampler node is R - Met G - Spec B - Rough A Normal G.
Bump Offset
Nanite Geo
