This is an example of how to make a animated sprite distortmap tile using U&V, and scroll using pv's.
The thing to remember is your distortmap columns/ rows must equal the size of the scaled size divided by the size of the original texture. In this case 512/128, or 4.
But you must also remember that a distortmap starts at 0, so when you set the columns/ rows subtract one from the total to take that into account.
Then you also have to set the loop to reflect that, 0 to 3, instead of 1 to 4, etc.
Note you will need Lucid's Math Plug( link below) to open the cap.
The lerp used to interpolate the texture uses Get T which make it much easier to get a percentage from 1 to 100 from the loopindex.
http://dl.dropbox.com/u/666516/tiled-distortmap-scroll.cap
Math Plug:
http://www.scirra.com/forum/viewtopic.php?f=29&t=9155
Its not exactly easy, and you cant just use any texture since you cant have floats in columns/ rows, but the results are kind of nice with all the vram saved, and it is capable of animation.