In the terrain editor, click the "proc" tab, then right click the preview sphere. Now you're in the function editor. Click the 8th icon (from bottom) on the left toolbar. Now click the little arrow under the black preview, and browse to your tiff image. Delete the original fractal function for the altitude production, and connect the altitude output to the tiff. You'll need to chooose "bicubic interpolation" for the image to avoid artifacts, and mapping mode set to "flat (vertical)", both these options are found next to the image preview.