I'm not sure exactly what is done on ambient, but simply adding a flat value for ambient doesn't give very good results. If there is no AO, and it still looks "psudo GI" it's possible that, instead of an 'ambient' value, you use the inverse value of N.L you got from your vector light (or main scene light), and multiply that by the ambient color. That basically gives you two-sided lighting, and looks much better than just a straight ambient value.

Harry, check out: http://coretechniques.info/index_2007.html
That is what Wolf is talking about.

Awesome, thanks! I'll look into that...