I think maybe the scale of the larger waves in the first image was not so much the problem but possibly they should have only very slight displacement.
Water surface can be a nightmare. I haven't spent much time in TG2 on this but I did it a bit in Terragen. I did do this a lot more in Mojoworld. Sometimes I'd spend more time messing with wave displacement than anything else. Add to this that water increases render times. I think waves are often very complex with all kinds if ripples, flat areas etc. I know this from looking at a river near me here and from doing water in Mojoworld. I often ended up with huge displacement complexity that was only very subtly visible. I think the problem is that you see the whole texture right across a flat surface. None of it is hidden from your eyes whereas with rocks you have vertical diaplacement creating movement in another direction and hiding things. Also, the look of the atmosphere and clouds often gives indication of what kind of day it is and what waves there might be and lakes are often very smooth and mirror like a lot of the time, especially when surrounded by mountains.
There is something bugging me about the shore area and how the reflections are behaving as if this is not how it would be reflecting in real life but I don't know what it is.
As for the terrain area. I love that. It's very realistic and your black and white treatment was very good.