Wouldn't be so sure. Steam moves much quicker than clouds in relation and changes shape, and needs a very short update interval. I don't recall a game ever featuring this effect. And the steam would need to be volumetric, a real object instead of bitmaps (which they are, on "emitted" simple 4 vertices polygons of two tris).
Yes but in the game steam is composed of textures (Particle Sprites). They cannot cast a shadow unless they'd be volumetric, which would seriously affect performance imho. (Set the sky quality to Ultra and you'll notice FPS drop, even though the volumetric clouds are fairly "static" in a ToDv4 route.)
A first step would actually be having the exhaust change colour according to the temperature of the fire and whether fresh coal has just been put in the firebox. Though even prior to that, there is just so much wrong with steam in TSW down to the very basics, the best thing DTG could do at this point is start from scratch. Spending a few evenings running Bossman and Victory locos in TSC (even if I have yet to get the Raven Q6 up the bank to Barnard Castle) is just so much better. The steam locos in TSW are like toys by comparison.
Smoke does not cast shadows in game but it´s possible to activate shadows on smoke emitters in Unreal. Anyway smoke still reacts to light in game. This is caused by the coaches internal lighting that is able to traverse the materials in a kind of quantum physics trick... Another example of those exotic inconsistencies in game Cheers