The entity lighting is still not quite as smooth as I would like. I adjusted the math a bit when clamping the distances, and this helps a bunch.
Instead of doing
weight = 1 / ( max( 1, distance ) )
I'm now doing
weight = 1 / ( 2 + distance )
Which prevents small distances from being weighted too heavily. This helps quite a bit.
I experimented with making the sampling voxel grid more dense, but the smoothing function looks to make a bigger difference. The issue is not the # of levels of lighting that are possible, but the quick jumping between the levels as the character moves around.
Come to think of it, since I am doing a distance - weighted average, there is no need to exactly sample at voxel centers. I can sample wherever I like, and get a weighted value. I should be able to sample more densely to get smoother lighting, rather than making the voxel grid bigger.
Here's a shot of the latest :