Linda, your post made me smile
Your scene is just fine, the render is pretty cool! It's just that there's something wrong with TG2 in this particular aspect, hence my recommendation to post it again in the support section.
If you try the same displacement on an inverted crater (try it!), then you can have a perfectly shaped shroom, without any broken parts. I would assume this should work with the terrain as well, but for some reason that is beyond me, it does not

Cheers and keep up the good work,
Frank