EDIT: Never mind, I've resolved the problem. The Panda .x exporter doesn't seem to export vertices in the correct order. I've since used kW X-port.
Lovely :3
I'll let the pictures do the talking initially.
Render from 3ds Max (how my vertex blending should be looking).
How it's presently looking in Irrlicht.
The MaterialType is set to EMT_TRANSPARENT_VERTEX_ALPHA, with lighting disabled and gouraud shading enabled. You can't see it as clearly, but I'm also having a similar problem with the vertex color blending on the doorway, the fade to black from left to right should be happening front to back. I'm completely stumped.
Vertex Blending problem
Vertex Blending problem
~MooN