Probably irrelevant in your situation, but one thing worth keping in mind, in these dark arts, is to make sure that any static meshes that are to blend and are part of different objects, is to place the origins of both objects at the exact same spot in world-space, to minimise the levels of cumulative rounding precision loss. (EDIT: ...all the way to the point that if you copy the centre location of one object to another, you may need to go over every vertex afterwards, to make sure the "pairs" are properly aligned.)
If fiddling with passindex proves insufficient to get things working, it seems to me that sometimes it helps to become a bit more heavy-handed and separate minor render levels, using alcscript.
http://www.guildofwriters.org/wiki/Mana ... nt_Objects
If the base mesh and the decal are instead both part of the same mesh, materials appear to be drawn in the order you have indexed them for the mesh -- material one draws first, then two, on top of one, and so on.