It's great, but it has also broken most Source mods made before 2013. Fortunately, the fix is pretty trivial: it involves editing the "gameinfo.txt" to mount the file assets in a different way / order than before.
If you want to play Radiator (or any single player mod based on Episode Two), just follow these instructions:
1) Download, install, and run Half-Life 2: Episode Two at least once. You can quit right at the main menu; we just have to make sure it unpacks itself fully and generates some files.
2) In your mod installation, replace the "SearchPaths" block of the gameinfo.txt with the code below. Or, for Handle with Care, just overwrite \Steam\SteamApps\ SourceMods\morematter\ gameinfo.txt with the updated gameinfo.txt here.
So, if you want to fix it yourself -- open up \SourceMods\YOUR_MOD\gameinfo.txt -- and in the SearchPaths block, you might see something like this:
SearchPaths { Game |gameinfo_path|. Game |all_source_engine_paths|ep2 Game |all_source_engine_paths|episodic Game |all_source_engine_paths|hl2 }
To fix it, we have to replace that SearchPaths block with an updated version, one that will load the base HL2 files using the new VPK system:
SearchPaths { game+mod |gameinfo_path|. platform |gameinfo_path|. game_lv hl2/hl2_lv.vpk game+mod ep2/ep2_english.vpk game+mod ep2/ep2_pak.vpk game |all_source_engine_paths|episodic/ep1_english.vpk game |all_source_engine_paths|episodic/ep1_pak.vpk game |all_source_engine_paths|hl2/hl2_english.vpk game |all_source_engine_paths|hl2/hl2_pak.vpk game |all_source_engine_paths|hl2/hl2_textures.vpk game |all_source_engine_paths|hl2/hl2_sound_vo_english.vpk game |all_source_engine_paths|hl2/hl2_sound_misc.vpk game |all_source_engine_paths|hl2/hl2_misc.vpk platform |all_source_engine_paths|platform/platform_misc.vpk mod+mod_write+default_write_path |gameinfo_path|. game+game_write |gameinfo_path|. gamebin episodic/bin game |all_source_engine_paths|episodic game |all_source_engine_paths|hl2 platform |all_source_engine_paths|platform }
3) Restart Steam to make sure the gameinfo.txt changes propagate.
4) Try running the mod now.
If that doesn't work, or you want to troubleshoot a Half-Life 2 or Episode One based Source mod, look at this forum thread for more details: "SteamPipe fix for HL2 and Ep2 Mods"