Finally got lighting to work the way I want it to when next to walls and cliffs. Getting the right configuration of normal map was quite tricky. The downside is that now I have to replace the old tileset with the new one in every single level... yay...
-Targeting puts the camera behind you
-Distance is based on target size (bigger = further)
-FoV adjusts when the cam can't move
-Right stick unlocks it
-When unlocked, it frames you + target!