After selecting the T.Ed terrain editor to use for my terrains, I’ve been having a play around with it. This was knocked up in under five minutes using a couple of supplied objects. The program’s pretty good, the next big step is to build a level editor, which can load the terrains in, and then add objects, such as fire effects and anything else that I probably can’t do within the terrain editor.
Here’s my piccy:
Coffee Induced Games 
Looks like a pretty good start. Are you using an original game engine or what?
The screenshots taken from the terrain editor. (T.Ed: Link
I’m writing my game using Blitz3D – Link – It’s not a games creation package but it’s not a low level language like C++ with DirectX. But the terrain editor comes with source code for Blitz to load in the landscape and set up any objects you’ve placed on the map as entities within Blitz so you can manipulate them from the game engine such as only drawing objects close to you, etc….