It looks to me that is a thin flow erosion with deep cuts. Terragen 2 can not do these effects that i am aware of as currently the erosion model to me seems like a simplified classic erosion model with softer cuts, could be off there but it looks like this to me. For that type of terrain feature best to use World Machine with a deep cut flow and Geocontrol but both softwares should get you the look you are after for mountains like that.