As far as I understand it, HDAs are great for building level editor tools in UE4. However, they're development time only. Houdini Engine is meant to be disabled during a package (shipping) build. So assets that are tweaked in UE4 need to be eventually “baked” out before packaging. Is this correct?

maxbale
So assets that are tweaked in UE4 need to be eventually “baked” out before packaging. Is this correct?

Yes.

As much as we try to make Houdini stable, fast, and lightweight, you probably wouldn't want Houdini running on your users' machines at run-time, and current Houdini licensing doesn't allow for it.