Usage

Apply standard envelope operator and paint as desired.
Mute envelope operator.
Create ICE tree in animation region above envelope operator.
Add Dual Quaternion Deformation compound and connect to root node.
Specify deformer group used for envelope.
If desired, connect weight map to Deformation Method and paint where you want to use DQ blending. Other areas use linear blending.
You can continue to paint envelope weights if desired.

Change History

2.0
Supports deformer scaling (but not changes to bone length parameter).
Exposed deformer group reference (previously could only use in name).
Exposed envelope reference and in name so you can apply to an object other than self.
Exposed envelope cluster property in case it's been renamed.
Removed references to cleaned-up weights. It is not necessary to clean up weights except in extreme edge cases (it turns out the problem with XSI Man in v2010 and earlier is that the bones_all group is missing a couple of deformers -- you can fix it by choosing Envelope > Select Deformer in Envelope and creating a new group). If you are using cleaned-up weights then you can clear the envelope cluster property reference but note that weights should range from 0-100.
1.5
Supports the case where the mesh is not at the origin when originally enveloped.
1.4
Supports moving the mesh or its parent.
1.3
Fixes polygons flipping at 180 degrees.

Compound File: 

Dual Quaternion Deformation.2.0.xsicompound