Hello, I had posted this on Polycount a while back and no one responded there, then I thought, duh, I am working in the unreal engine, so I should post here.
Instead of typing it all out again with the screenshots, I will just put the link to the question there.
Just to address any comments early, I have watched the layered materials tutorials and so far in them, they only seem to cover 1 material per poly.
So in the example I was trying to show that the intent is to have a lower poly mesh with a base material, then otehr materials over lapping it but only painted on part of that poly as overlap.
I know how to do this in terms of texture painting.
The confusion to me is having the 2 materials have different uv sets so I can increase the resolution on the overlapping texture paint.