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Animate the texture you would anything else, save out each frame, and there is a way in unreal (i'm assuming 2.0 but it is probably similar in 3) to stitch together a custom animated texture.
The process i go about to do this in Unreal 2.0 is Make a new shader in the material window, assing it it's proper group and name and such, go down to diffuse and in the animation tab there is a property called animnext - i've seen people have to input eachc frame individually for long animations but there may be a script or importer for them now.
I hope this helps you out
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