I was doing some reading on deferred shading decals and how you basically use projective texturing similarly to shining a flashlight on an object or shadowmapping.
However, if I have an animated character with a bloodstain on it, the bloodstain won't deform with the model this way. The worst is if I have a bloody hand on a character, and the character moves the hand near its leg, suddenly the decal might project onto the leg. The deferred decal algorithms all mention how amazing this technique is and it seamlessly handles static and dynamic geometry, but they don't talk about how to handle animated characters how I want.
It may not be too noticeable if I keep the decal small, but then it's a bit hard to have an effect similar to paint covered zombies in Halflife 2: http://www.visualwalkthroughs.com/halflife2/ravenholm1/30.jpg