Yes it can but its a bit od a process, you have to save out as a .raw file then convert to bmp in an image editor, import inyo Med as an image file hieght map and done for that part.
Then render out the skin in Terragen and save out to your project file then add to terrain skin in Med. Sky boxes are what makes those awesome skys before lite_c
Use the 'manual' Luke, the manual is your friend. 'Self reminder'