No, I wasn't. Does "setshader decalworld" require any arguments to work? I just tried it, but nothing changed.

Nope, it has no parameters at all (which is kind of odd actually if you think about it, because you have for models).
Specifying the decal texture can also be done by using "1" or "u", but "d" is recommended of course.
You don't need any alpha material to let a decal-texture be rendered on top of the diffuse texture, as it's a shader-setting which counts only for 1 specified texture, not for raw geometry.
If you're having trouble with it, try specifying the payne_512x256 decal-texture on top of the diffuse payne_512x256 texture in the makke folder.

That is exactly what I am doing Suicizer.
Also, it DOES need alpha material for the effect I am trying to get.
What I am doing, is texturing solid cubes so that they look like a fence or grate; That is to say, you can see straight through them in some places.

For some reason, this process seems to only work on occasion and I have no idea why that is.
When it does not work, it appears to treat the empty space in the texture as a glowmap instead of transparency.

Receiving the same result with a decal-texture as when using a glow-mapped texture is because both are being rendered into the diffuse texture at first, which makes Cube Engine 2 probably think that the whole texture should be alpha-blended. At least that's my theory, if it's incorrect please prove me wrong.

If you want to have the effect of having a texture which has transparency on certain places only, create a model instead (just a thin surface of 32x32 or 64x64 units does the job), modify the original decal-shader or import the decal-shader of models into the texture-shaders.

Ah, thanks for the insight. That gives me an idea as to how I can fix it, at least.

The whole point of this, is so I don't have to use mapmodels or expensive geometry.
>.<