Yes like Grafikeer says, stay away from white. I do because every time I hit erode the terrain also gets a little higher/whiter. If you get all the way to 255 you have nowhere to go and start making plateaus.

I usually copy directly from Paintshop and paste into the open Bryce terrain editor. I don't load saved images. The picture is still 8-bit. That's where the artifacts come from. I made 8-9 erosion passes on my image. Looks like you did about 3-4. Keep going it will smooth out. The inside of the craters will start to bowl out instead of looking like pie plates.