Sounds a lot like Crytek's Light Propagation Volumes, which never had enough precision for anything more than secondary illumination and increases memory requirements by squared or more as you extend the range of the illumination. Alternatively it also sounds like the same hack used by Bungie in Destiny/Irrational in Bioshock Infinite/Epic currently in UE4. All of them render lighting information to a volume texture which is then used for deferred rendering of transparencies. Trouble there is it's all too low of a resolution to get very good shadow information or good specular.
Here are some of the examples: http://advances.realtimerendering.com/s2013/Tatarchuk-Destiny-SIGGRAPH2013.pdf http://www.crytek.com/download/Light_Propagation_Volumes.pdf