Is there a brush mode here , i.e., when the mouse is dragged, the image value of the rasteroverlaytile is changed in real time based on the distance from the mouse point and rendered? Of course, I’m using material layer blend here.
No, sorry, there is nothing like that built-in.
The main challenge in implementing something like that is that a raster overlay has the “same” image at multiple levels-of-detail. So any kind of interactive painting would have to upload an entire pyramid of textures, not just one.