Improving Shadows System

hi
recently i'm working on performance issues and such, one of the biggest challenge in this area is shadows and how do we make them faster?
the answer to this question is another question:
how much cpu and memory can we sacrifice for this?
the answer to this one is: it depends on other process in the game and your platform.
so here i'm working on pc platform where memory is not an issue (like in ps2/xbox/ps3) so the main question is:
what do you do if you have big scene with 5000 point lights that need to cast dynamic shadows?
lets say we can determine their visibility very fast, so the bottleneck is the shadows generation and not the visibility of the lights. another assumption is that the lights is mostly static but if at any time we want some of the lights become dynamic, we could.
so the answer to this question can be one of those:
1. use light maps
2. compute all shadow map at load time
3. other
well, lets check those methods one by one:
1. light maps is out of the question because they are static and if a light is moving, his shadows wont be updated. also if we have a bridge and we walk beneath, the shadows of the bridge wont cast on our character, because when we compute those light maps, our character wasn't there.
2. this sound promising, it solved the problems in 1 but has another problem.
each point light using cube map for his shadow maps, that means 6 maps for each side, so if we take for example 256 by 256 cube map for all the lights we get something like 1.5 mb per light (assuming 4 bytes per pixel), this become 1.5*5000=7500 mb!! = 7.5 gigs, this is huge and of course cant be done in the real world when we have limited memory.
3. so what we need is a solution that solve both 1 and 2 and take reasonable memory, so the solution i come with is to use a cache system for shadows.
this system will have specific amount of memory dedicated to shadows and based on priority value we computed for each light the system will give cache entry for the most important lights (that is for example: the lights with large range and closer to the viewer).
so basically the system work with x entries that keeps shadow maps and set them as needed to the right lights, when we set shadow entry, we flag the light that he needs to update his shadows, this way we wont spend memory for far lights the viewer wont even see.
so when the scene loaded, the system set shadow entries for the most important lights and when the light tries to generate his shadows we check:
a. is this light have shadow entry? if not it means this light is not important and wont generate shadows.
b. is this light already updated his shadows or not? if not it means the light become dirty or someone flag the light that he need to update shadows (see below)
if we have shadow entry and the light needs to update his shadows, we get the shadow maps from cache entry and generate shadow maps for shadow maps stored in this entry.
when we done, we flag this light that he update his shadows so next frame we wont update it again.
few thing we need to consider:
1. if entity that cast shadows get inside light bounds, the light must update his shadows so the shadows of the entity will get in.
2. if the light is moving we need to update his shadows maps.
ok, so this is the main idea of the system and it is very fast and generic and as any algorithm, this have some tiny things that need to be done correctly so it works smoothly and handle all the special cases.
before i finish, here is another question:
what if we have a room with 500,000 faces with one point light that cast shadows?
we use this great shadows cache system :)
right, but what if an entity, lets say a small ball with 16 faces get inside that room?
hmm, the light need to update his shadows so the shadows of the entity will get in.
well, thats right but that means that for this tiny entity with only 16 faces you need to generate shadows from 500,000+16 faces???
think about it until next time...