It is supported, but not sure what engine branches.
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Dear Esther used a different, optimized and better detail sprite system. The system could hold up to 3 times more stuff than the original. Also, I think the detail sprites were somehow linked with the fog and some particles, so that they all move uniform with the wind. For questions ask Mr. Morgan, alltho I doubt he will respond in a timely fashion nowadays.
I have no idea how source does it, but you can usually write a pseudo wind shader as a vertex shader. I think it's a pretty standard thing. You can go have a look at overgrowrh, by wolfire games. All their shaders are editable if you download the game.
Dear esther also had some sort of animated lighting on the sprites. to make them appear as blowing in the wind even more. It's very subtle but it works. Very clever