I think what Bobby is saying is that in Terragen you have Ray Trace Objects enabled by default, and as long as that is enabled and you do not override it on a per-object basis, then you will not get displacement. Instead, displacements are rendered as bump maps, which only affect shading and do not deform surface geometry. So you *will* see an effect, but it will not change the silhouette (and actual shape) of the object. It just simulates the appearance of bumps.
- Oshyan