Any shader that provides *displacement* can be used. Or rather, *only* shaders that provide displacement can be used. So, mainly, this would be the ones that show up in the Create Shader menu under Displacement Shaders. Note that some, for example the Image Map Shader, do not inherently provide displacement by default, they must be set up to do so.
In the case of the Image Map Shader you have to check Apply Displacement on the Displacement tab and adjust the Amplitude appropriately. Remember the size is also measured in meters and for the Image Map Shader it is only 1 meter by default, so this should also be adjusted.
More generally, the shader input is essentially designed to allow you to convert any *existing* displacement into a heightfield for export or further processing. There is not much reason to do this unless you need to either perform heightfield-only operations (e.g. erosion), or you want to export. For a scene entirely in TG2, not using heightfield-specific effects, it is best to stay with procedurals for maximum detail.
An example of use: Put a Power Fractal terrain into your scene and make sure you can see it creating terrain. Now, let's say you want to do some erosion on a section of that terrain. Erosion can't be performed on procedurals for technical reasons (this is not a TG2 limitation, procedural erosion is a generally unsolved problem), so you need to convert it to a heightfield. Heightfields are finite, a limited area of terrain (as opposed to the "infinite" area of a procedural terrain), so you need to decide on the specific area you want to work on. This will be entered in to the size and position parameters of the Heightfield Generate.
Once you've selected the area to operate on, plus the Power Fractal into the Shader input of your Heightfield Generate. Then press the Generate button. Once completed, *disable the Power Fractal*. You should then see a stand-alone square section of your terrain, just where you specified in the Heightfield Generate size/position controls. Now you have a heightfield version of your procedural terrain. You can perform erosion by using Add Operator in the Terrain layout node list area, or you can export to TER or EXR format by right-clicking the Heightfield Generate.
I hope that helps.
- Oshyan