Ashley> It looks like you were right, big up to you.
Here's a quote from Project Zomboid's dev:
n any case, it's done with multiplied overlay quads with vertex colours, since the tiles are 2D, so it's all completely faked. Not the fastest but we'll hopefully optimize it as we go. Problem is with iso viewpoint is the draw order is rigid so it means it's difficult to optimize to avoid binding new textures each draw.
I'd be very interested into an advanced tutorial of this technique, since its still obscure to me.