hmmm, nice find.
So setting clothsim isn't THAT hidden after all.

ClinterinoM0 | C: 님이 먼저 게시:

Source 2 doesn't use vertex simulation yet. Still with the old jigglebone system.

I'm wondering how does one add either jigglebone or helperbone to Source2 model.

sorry to bump this up, but looks like with 'Spring Cleaning' update, SMD support is dropped

Spring Cleaning Update page 님이 먼저 게시:

Item Workshop Tool: SMD file support has been discontinued for workshop models and animations — existing SMD submissions can be processed, but new submissions must use either FBX or DMX file formats

you'll either have to set scale in import window http://i.imgur.com/hRrA4be.png or scale up the imported model/s by pressing S (model should be auto selected after import)

Looks like it indeed is a thing with custom normals.
Just imported my exported DMX, applied any flex/shape key, and boom.

Looks like it's possible disable displaying custom normals by un-ticking "Auto Smooth" (in "Data" tab, under "Normals" section), http://i.imgur.com/iqkUDOl.png or delete them by clicking "Clear Custom Split Normals Data" ("Data" tab, "Geometry Data" section)

either Valve gives us the tools or (more likely IMO) some 3rd-party app will pop up

Can we at least see the QC and/or model files you are trying to import? It would help getting the bug fixed.

sorry to bump this thread again, but looks like with the today's/"June 20,2015" update of dota2reborn ( http://www.dota2.com/reborn/updates#July20 ) they "Enabled support for stereo morphs". :D
And it's working! http://i.imgur.com/7Gz8ib1.png

And two days ago i was digging in BleST source code to hack in stereo support, with kinda success. looks like it doesn't need fixing anymore :V
http://gfycat.com/FlippantSoggyBighornedsheep

that's what I thought :/

I've tested that thing mentioned in link, "(...)it relies on the naming of the morph targets to be right_foo and left_foo for a stereo morph named foo(...)"

Adding "right_" to first morph and (optionally!) "left_" to second one, seems to merging those two morphs into a stereo one in SFM! At least one (kind of) workaround for stereo morphs till it's implemented correctly.

Sorry for bumping this thread, but I got some (baddish) news
looks like stereo-ness wasn't yet implemented in Source2

http://dev.dota2.com/showthread.php?t=173901

The only solution for now is "(...) to do the splitting in blender and export a separate morph target for the left and right channels(...)"

Is there even option in clean Blender to split shapekeys in half like Source1 used to do?