I apologise if I came across as saying "Ditch the flashlight". Not what I was trying to say at all... As you pointed out, a flashlight done well can be very effective indeed. Conversely, a flashlight done lazily just spoils the game completely.
As I said, use the fog excessively like in Silent Hill or use it subtly... This was meant as a supplement, not a replacement. What is nice about this fog is that you get a height based option (as opposed to a distance only option) which is nice for a subtle effect. Stuff at ground level are obscured but they become more visible the further off the ground... I.e. show the table but the legs start to fade out nearer the ground... It just adds to the mood.
Anyway, it's awesome and it's free so experiment and play with it... or not. At least you now have one more option than you had yesterday :) Hope it helps :)
RE: Lock In's new title screen might evoke a familiar feeling (gameplay screenshots too)