The blend shader blends away not only the heightfield elevation but also the heightfield's ability to replace any previous displacements. Where you have dark parts of your painted shader, they are not saying to use lower elevations, they are saying to apply the heightfield shader less strongly.
You can solve this problem by using another heightfield shader to set your base altitude for the local area. It could just be a flat heightfield with only 1 x 1 pixels. After that, you'd apply your main heightfield which uses the painted shader as a blend shader.
Matt