Interesting work so far, good start!
I don't have real problems with sharp strata, I think they don't look bad at all, they just need a little break up.
If you intend to make them less sharp try to increase the strata angle a tad bit, say from 0 to 10 degrees (I can't remember the exact name of the setting, but the default = 0)
If you add an extra compute terrain and disable blend as stone density in your fake stones I'm pretty sure they will work fine and as you expect.
I'm working on a strata-project as well now and am experiencing the same artefacts. I notified PS about this problem.
Cheers,
Martin