The best example I can think of is probably Minecraft. If you hold a tool in Minecraft (such as a pickaxe), the texture is drawn and it has an "edge". The color of the edge isn't just a random color, but rather it is about the same color of the edge on the actual face of the tool.
How can I do this with XNA?
As stated before, I currently construct a quad and render an image to it.
Edited by Tonyyyyyyy, 09 May 2012 - 10:12 PM.