The problem you are having, I think, is that with Voronoi Cellular Noise there are no steps of grey between each patch. I've had a go with the Step nodes before and they didn't do what I expected (wanted). Terragen doesn't like pure verticle surfaces, because the geometry triangles become too stretched to allow further finer displacments laterally, they too look stretched. I've had better success by making vertical displacments at a slight angle, say 85 to 88 degrees, by adding a small roll off in the greys between black and white of the displacment. This seems to add more vertices in the vertical.
Having a look at your .tgd, your get altitude function will only be working on the final position of the whole node network, as it only returns it's value on rendering, so you plugging into it's input is redundant, the Get functions don't use their input at all. (the reason for it being there is the way the program sets up nodes). Something I found out recently.
Have a go at painting some hard edged white splodges on black in photoshop, then add a slight blur to the image, then use an image map shader in TG as the displacment function. A colour adjust shader between the image map shader and the displacment shader will give you some control over the vertical'ness of the sides. Either that, or play around with some clamped power fractals, or, use Geocontrol.
