One possibility for your first question. What format are the files representing the terrain? Rather than modelling the terrain, I wonder if you could get them exported into a format supported by GeoControl. If so, you could import it then export a .tga file and use that to create the terrain. Of course, if you can get the terrain output as a .tga from the start, you wouldn't need Geo :-)

GeoControl can import .ter, 16-bit raw, r32, and PGM as well as .tga.

Steve