This is quite awesome!
although the amount of setup for it to work scares me a bit... waiting for .cap and effect files![/quote:xbv3pxi6]
From what I can gather (and David will have to confirm if this is right or wrong for the shader, I'm mostly guessing) you do the following.
Create your scene, object or whatever you're wanting to use it on.
Make a gradient that goes from the bottom (black) to the top (white) of the model. Don't use the depth map or zbuffer or whatever it's called in your program of choice.
Make a normal version using tangent space (the original videos say world space, but the appearance is that of a tangent/texture space normal map). Max users say this is done via render to texture, Softimage and Maya probably has a buffer it can output in this format, Lightwave needs some extra plugins since it uses tangent but can only natively output world space, lol.
From there you need to place the height map in the normal map, so the highest area's are transparent (white) and the lowest area's 100% opaque (black).
Go back into construct, load your full rendered image, and the normal+height image, place that over the rendered one and apply the effect.