A very long time ago there was a photoshop plugin that took greyscale images and converted them to DXF height maps. Not alot of good for anyone save landscape modelers. I can't recall its name. Several programs include this functionality now, Animatek Worldbuilder, (I believe Bryce does too), Vistapro (the cheapest of the ones I list) and your high end 3d programs such as 3d studio max can take a greyscale image and create actual geometry through the displacement map feature. Look for something saying it works with DEM data, displacement mapping, etc.