Yes, this file was a breakthrough on one of my images that required massive forestry off in the distance! I used a 2D image of a real tree with alpha channel, but it could also be done with a 2d tree image rendered in any app, provided lighting is accounted for.
I used to use 2D billboards like this in Bryce, but had to add them manually (very thankfull for cut/paste and grouping!), but always hoped I could do populations with the fractal and distrubution constraints Terragen had since this is more realistic and easier. Its now possible and the game is ON!
Additionally, you can use these for up close items as well, as long as they are quite small.
Over the past few years, I've been accumulating 2D images (with alpha) of trees and foliage, and more than half I created manually (with lots of work). Alot of matte painters use them as well.