We theoretically analyzed the two-body interactions and decay rates for atoms dressed by multiple laser fields to strongly interacting Rydberg states using a quantum master equation approach. Particular attention was paid to the relative merits of the three-level dressing scheme (e.g., using 767 nm and 457 nm light) compared to the two-level dressing scheme (e.g. using a 288 nm UV laser). While two-level dressing eliminates loss due to the decay of short-lived intermediate states. We also found conditions for three-level dressing which benefit from electromagnetically-induced transparency (EIT) on the two-photon resonance and a cooperative multiphoton resonance which could significantly enhance the dressed state potentials while providing remarkably long coherence times. As a consequence, near-resonant Rydberg dressing in three-level atomic systems may enable the realization of laser driven quantum fluids with long-range and anisotropic interactions and with controllable dissipation.