I love the sky. Clouds, rain, the sun and the moon and all of the interactions between them. On my own, i've been studying what makes all of these things that I love. Sunsets and clouds mostly. Has anyone out there attempted to simulate say the color of the sky by the same process that actually colors the sky (different light waves being absorbed and radiated, and reflected)?

A lot of people have.

The most quoted paper about it is probably Preetham et als A practical analytical model for daylight

Rayleigh scattering can be used to simulate the effects of atmospheric perspective.

As for things such as rainbows or sundogs, I believe that the correct way to do this would be to implement the Fresnel equations into the light transport portion of the renderer (instead of using Snell's law on its own).

Everything I needed to know about these light transport methodologies was readily available from wikipedia.org.

In terms of realistically simulating the fluid behaviour of gases, you may want to check out some of the papers on solving the Navier-Stokes equations by Jos Stam or Mark J Harris. Both are amazing computer scientists with the gift of gab.

Stam:
Main publications page...
Real-Time Fluid Dynamics for Games (a very painless introduction)
Stable Fluids (*the* classic paper)

Harris:
Fast Fluid Dynamics Simulation on the GPU


I only started researching all of this very recently, but if you have any other questions related to volumetric rendering of density fields like this, I can definitely try to be of help.