Well, I'm still working out a few minor kinks, but I think I got us a tree system that might work. I tried using a foliage volume, but quickly discovered that UDK hates instanced geometry and proceeded to apply the same lighting to all the leaves. Maybe I just don't know how to change that 'feature' but it seems like it's an inherent problem with the setup because I've heard other people having the same issue. As a result, I decided to resort to the good old-fashion hand-placed branch alpha technique. I think the shape of the trees could still use a little refinement and the bark obviously is a place-holder, but with what I learned with this tree, my next attempt should be far better and take much less time. The tree up close is about 5,000 tris, but I added a LOD so that it is about 1k after a certain distance.
Hopefully this won't choke our level any more than it already is.
LODs in action: