Try adjusting the Sharp/ Fuzzy slider and if you haven't already look at playing with the Fractal noise slider and coverage slider, these can help soften the transition between colors. Ask you self what kind of terrain you are trying to represent, how was it laid down and by what precesses? What kind of rock/s would be in that environment and the geophysical processors and thus mineralization is present, it is mineralization (that is the type of minerals present in different rock types) that along with geomorphology you need to begin to understand in order to help bring you terrain art to the next level, hard to being with but a key to getting as far as you can with the tools you have.
Use what you learn form books and the Internet (Such as Google Images) and then ask I know that on my screen in Terragen I have a landform which was crated by such and such geological processes (in a manor of specking, since Terragen dose not have all the complexities of even the most basic rock types in nature), and you know that certain types of rock are likely to present them selves, the colors you use will represent them.
Regards to you
Cyber-Angel
