Yup - I worked (some of it) out..

Created a height-map in PSP and applied it to a terrain; then used Altitude->Filter:Map->Colour:Map with the "Rainbow" colour map in it, just so I could see how the mapping was working. Had to adjust the Filter:Map values, but I'm starting to get there...
Oh, and the wierd tiling in the forground is the water plane. Didn't want the water to start confusing me when trying to sort out the banding on the terrain.

I can use the same Filter:map to adjust between different textures for the sand...

Cheers,
Diolma
(Yawn - time for bed..)