I think you've just found something that might help you - check the post re: my Terraman script.
I've been going through the same kind of issues as you, i.e needing to fix a very specific area in the terrain. I started using the Painting shader to do this , but found it's not really accurate enough to do what I want, plus the fact that the terrain redraws as you paint which is slow - even pausing the display is slow and you have to wait for the display to redraw as you change angle - slows down the workflow quite a bit.
The solution I've come with is to use Maya to create projection cameras to make my masks for use in Terragen.
For example - if I want to create a mask to add some feature or displacement in Terragen, I bake out the terrain as an Obj using the Micro exporter.
Then using my Terraman script import the mesh into Maya - after cleaning the mesh using Meshlab
http://meshlab.sourceforge.net/ (one mesh I exported had 3 million vertices! after cleaning reduced to about 500k)
Once in Maya it's very easy and intuitive to set up a projection camera (orthographic projection) again using the Terraman script which enables the camera data to be exported as a .chan file.
Then I render out a image from the camera projection in Maya - import that into Photoshop and paint over it.
Export the camera data as a chan file from Maya. Create a camera in Terragen and import the chan file and make sure the Orthographic value matches that in Maya. The Terragen camera can then be fed into a Image map shader to be used as a Blend mask or whatever you want.
May seem like a more complex workflow than just using Terragen, but in the long run it's more intuitive and quicker than trying to get the same effect using the Painted shader, it's also much more accurate, you can create an effect
exactly where you want it.
I use it for virtually everything now - sculpting terrains, adding displacement, masking out regions to add colour, adding regions for populations, you name it.
In the scene I'm working on I've got about 8 projection cameras, so the viewport is a bit busy now

I know you can hide objects, but it might be nice to have an option just hide cameras.