Hi Calico,
I think I understand your questions. I'm not sure how well I can answer though, but I'll try

First, a few things you probably already know but which don't fully answer your question.
One of Terragen 2's main goals is to fill a particular niche which has been open for a long time, that of rendering landscapes and environments cost effectively without having to compromise on photorealism. With our limited resources we've tried to stay ahead in certain key areas, particularly atmospheric realism, displacement-heavy rendering (even if there are many problems still to solve), and enough procedural tools to allow it to be flexible enough to be used in production situations where other solutions would be inadequate or take longer to get the necessary results. I don't mean to say that the procedural tools are its greatest asset - I would say that they are merely adequate at this point - but they support Terragen's other strengths. There's still a lot of ways that we need to improve communication with other tools so that Terragen can fulfill its potential in that niche.
Lots of other things that will affect Terragen 2's wider appeal, like the ability to render objects from other sources, quickly place them in the scene and texture them with ease; faster and more direct methods of modelling and surfacing the landscape or getting that data from outside modelling and paint packages. Those are things that we will improve in future updates. But our strategy hasn't been, and is unlikely ever to be, to create a general-purpose 3D modelling and rendering package, so that still leaves us with the problem of how to create scenes where the landscape is only part of the whole composition. For users coming from certain backgrounds this will be less of a problem as we further develop the tools needed to composite with elements from other renderers. At the same time, we'll be continuing to improve Terragen's capabilities to do a lot of the non-landscape rendering and texturing within Terragen itself. We'll never be able to do all of these things as well as Blender, Cinema 4D, Photoshop, etc. but how important this becomes to the individual user will depend on what their aims are and the relative importance of the different themes and elements of their art, I suppose. If the landscape is only a minor part of the composition, or if the other aspects have to be the very best they can be, the artist will have to break out the other tools and make them work together. By improving the import/export capabilities of Terragen we can make this process easier.
If I'm not mistaken, the crux of your question comes down to the fact that you see at least two possible ways that Terragen can be incorporated into larger, high quality works, but there is not enough clear advice on how to actually achieve that. My personal (3D-CG-biased) opinion is that to achieve the most photorealistic results, generally, most things will need to be done in 3D, with Terragen only being used where it excels, and that 2D work will often form a big part of the work (as textures, 2D backgrounds, 2D backgrounds mapped into 3D, whatever is best for the job at hand). Terragen could fit into that pipeline in various ways. How it fits will usually depend on many more external factors than just Terragen itself. The loftier the goals, the less central Terragen becomes, and therefore the problems to be solved and the techniques to be employed become less about Terragen and more general to digital art.
If the goals are simpler, Terragen alone may be perfect for the job. And then of course there are jobs that Terragen is just not suited to. Unfortunately the ones in between tend to be the most difficult

After all that, there are improvements to be made which will help everybody - no matter what their abilities and experience. Terragen needs to get easier to use, faster and more reliable. We'll tackle all those things.
I know this isn't really answering your question, but we do want to improve the tools, provide more resources for learning how to incorporate Terragen into workflows and pipelines. We'll need to do that to sell this software and to allow existing customers to get the best out of it.
Let me know whether I've gone any way towards addressing your questions or completely missed the point

It's been a long day!
Matt
[EDIT: I noticed that I emphasise photorealism a lot. I won't apologise for that - it's what I strive for

But if you exchange 'photorealistic' with 'high quality', I think a lot of what I said still applies]