Your project made me try to play with terrain curtains. the untextured pic is the terrain at the resolution of 512, while the render is at 2048. I think it looks okay. What I did: found a photo of a plastic curtain on the Web (the stairies are the texture of the curtain), cropped it in PS, applied 0.3 pixel Gaussian blur and saved as a jpg. Imported it into the terrain editor, lowered the terrain, *inverted it*, and then smoothed it out. Exited the TE, increased Y first to 120% (because the folds were not pronounced enough) and then again, to 130%.

-- erlik