We discuss techniques to generate long-range interactions in a gas of ground state alkali atoms, by weakly admixing excited Rydberg states with laser light. This provides a tool to engineer strongly correlated phases with reduced decoherence from inelastic collisions and spontaneous emission. As an illustration, we discuss the quantum phases of dressed atoms with dipole-dipole interactions confined in a harmonic potential, as relevant to experiments. We show that residual spontaneous emission from the Rydberg state acts as a heating mechanism, leading to a quantum-classical crossover.