I'm back inside, so let me expand a little on my previous post.
In the example I linked to, I used Terragen for two (and could have been three) purposes. The first was the generation of the .ter file or the heightmap. I DIDN'T use Terragen for this though I easily could have. I used a program called World Machine, which I heartily recommend for heightmap generation. Terragen can generate fairly decent terrains, but if you want to see erosion or terracing you will need something with more ooomph.
The second was the skydome. I used terragen to render five views of the sky (land rendering turned off): front, left, right, back and top. There are scripts available with terragen to automate this. I then fed these images to a freeby from the Unwrap 3D people - smgv10.exe to create a sphere map. I then used this to texture a squished half dome in Milkshape. Cubemaps have two problems in my estimation, it is damn near imposible to erradicate the seams, and the distance to the corners is farther than the distance to the sides and fog 'accumulates' in the corners. I squished the dome because I wanted to simulate ground fog, the horizon is farther away than the sky overhead and therefore foggier.
Finally, I used terragen to generate the texture (kinda) that I used for the matrix. I went on in gory detail about this in the other post so if you are really interested (or a masochist) you might want to read that first. I'll just cover the high points
I rendered the terrain using terragens orthographic mode (satellite view) to an image the same size as the terrain tiles (i.e. terragen calls the terrain a 257x257 terrain, the image was a 256x256 bmp). I then reduced that to a 16-color image with PaintShop. That meant that the 16 tiles in my matrix texture should each represent one of those colors. I got real lazy and just made a 256x256 bmp with 16 square color patches and slid a layer with some greyscale noise underneath and that's what I used to texture the matrix. I'm not totally happy with it and I'm sure that it could be improved a lot, but it was easy.
Anyway, that's one example of how terragen could be used...
Ta,
Anthony