Interesting discussion. You might consider this a bug in that the "shader preview" for the cloud noise seed is not showing what will actually be produced, however (and unfortunately) in a technical sense it is correct as the cloud noise seed (and any other noise function) can only ever show one point in the 2D noise plane, and the shaders that depend on it later in the chain may sample elsewhere in the shader. Since you can connect 1 shader to multiple other shaders, there would be no way for the shader to determine how to offset its preview display, thus using 0 for altitude (Y) makes sense. It's one of those counterintuitive things that actually makes sense in the long run, and is sadly very difficult to communicate clearly.
I'll have a think on whether there's any better way to handle this. Having a preview for the cloud shader itself and having that open while tweaking the density fractal would help I think.
As for the Distance Shader, as far as I know it's still working as it should. It would be best to post a separate thread about those problems though.
- Oshyan