Hi James,
Can you send me your .tgd file or post it here for inspection?
Like I said before, what I have shared thus far is purely the explanation of the settings, just that.
As you have experienced yourself there are a few caveats when using an actual terrain and I still need to finalize that second part.
I'm sorry I haven't been able to finish what I started yet.
In the end I think I will start a topic about this myself with one robust workflow, since there's also a little bit of incorrect information here as well.
This will also make it easier to follow for anyone since discussion is not being scattered and interfered with.
Cheers