This is what you should see when UVing.
The top window is the 3D view. Hit 7 on the numeric keyboard to get top down view and make sure it's Edit Mode. Keyboard command A will select or deselect all polys. You want them selected. The poly arrangment here is immaterial. You might have more polys or less. It depends on how you're subdividing to see the terrain. None of that is important here. It could be one poly at this stage. The bottom window is the UV/Image Editor. Where it says Image on the bar at the bottom, click to create a new image. You'll see various options. You want it 32 bit. Width and Height is up to you except the terrain is obviously a square so make it so in here as well. 2048 is a decent size. After you've done this, move the mouse to the 3d view and key command U. You'll get that menu and select Project from View (Bounds). That will set up the UV to be filling your Square texture.
Next you need to go to the render properties on the right. Near the bottom you will see Bake. Bake Mode has lots of options. You can choose texture although there are in fact a few ways to do this. Displacement didn't seem to work for me. I'll look into why but I think maybe it has to be projected in a certain way from real displacement. That's OK for Cycles but not for Internal. Hit bake and it will render the texture to UV.
Then back in the UV/Image window under Image menu you can save the image to a file. Once you open the next window you'll see options on the left to save as exr which is what we want. That's it.
Some of this stuff I'm new to because I was using a much more complex baking technique with Cycles. You have to do it a different way with Cycles.
http://img69.imageshack.us/img69/8149/i099.jpg