I have created a Mosaic Dataset of a lidar DEMs. I am using the "blend" mosaic operator; the rest of the settings are default. I also have created a Referenced Mosaic Dataset that points to the original Mosaic Dataset and introduced a Hillshade function. For the most part the Referenced Mosaic Dataset displays a nice hillshade, but on the outside edge of the grids it seems to be having trouble. It results in a blurred edge effect that shifts as you pan.
I changed the mosaic operator in the Referenced Mosaic Dataset to "first" and the problem went away.
It appears that with the "blend" operator the outside edge values are attempting to blend with no-data values. I would expect the "blend" operator to behave the same as it would if you were using the Mosaic to New Raster tool.
Is this a known bug?
