Attached Link: http://www.renderosity.com/mod/gallery/index.php?image_id=37828

I did an image...omg, 6 years ago?! that uses terrains for the waves pretty much like described above.  The waves were done with the terrains, the little indentations in them were from the "bump" setting in the material.  I couldn't tell you any details about the fractal used for the terrain or the exact material settings, the original file is *long* gone.

What's different about how I did the waves here is I used the "tile north" "tile east" etc. fractal setting in the terrain lab.  I think it looks a little bit more natural, but the extra work isn't always worth it.

1. create a terrain and go into the terrain lab
2. play with the fractals, keep hitting the fractal button until you get a terrain you like
3. leave the terrain lab
4. duplicate the terrain, hit the A button and change the x position to the width of the terrain (81.92)--this will move the new terrain just to the right of the previous one
5. go back to the terrain lab with the new terrain
6. change the fractal type from whatever you used before to "Tile East" and hit the fractal button
7. leave the terrain lab and render; the terrains should be roughly continuous from one to the next
8. create another terrain and move it another 81.92 units to the right of the second terrain, go to the terrain lab and hit the fractal button, leave the terrain lab
9. etc.

The tiling only works from the last terrain you created.  If you go back to the first terrain and duplicate and move it south and try to tile south, the terrain you've created will actually match the third terrain (or whatever the last one was), not the first.  Don't create any other terrains (like land) while you're working on the tiling wave terrains or you won't be able to tile any more :(

You may also notice when you render that there are cracks between the terrains.  That's because terrains are ever so slightly smaller than their bounding boxes for whatever reason.  When you're done creating the terrains, select them all and resize slightly so the edges of the terrains actually touch.

By the way frogdot had a good wave tutorial that's more crashing waves, I think.  It should be somewhere in the forum.