Yeah basically exactly that. I've seen the same sort of deal selectors in open source, and closed source apps, so must be examples available (I haven't looked).
And mixing gradient maps together, even with just two passes can give you some pretty nice results as seen below. Second gradient map is multiplied at 75% opacity. So in TG multiply shader and surface layers coverage.
(not my maps just grabbed form Google as an example. This is Ireland)
I imagine the transitions of colour would even work better in Terragen, as well as much more space to work with so not as super sensitive. Matt mentioned PS works off of gamma, which would explain the weird colour burning and colour collision you have to fight, which is even seen in this gradiented image. But with fuzzy-zones and breakup in TG this could be very, very powerful!