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1) You can create a video of a fire and apply that to a billboarded quad. I believe this is what most video games do. The difficult part is creating the video of the fire. You might be able to find some animated fire textures on TurboSquid or other similar sites.
2) You can use the viz.intersect() command to determine if a line goes through an object. So take your random point and create a line that extends upward, then check if this line intersects with your building.
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