in every function/action attached to an entity add:
Code:

if(vec_dist(my.x,player.x) > clip_range_var)
{
  my.invisible = on;
}
else { my.invisible = off; }

this will hide all ents that are outside of your custom clip range,and will leave your terrain unaffected (also increase your clip range,to show the mountains)

PS.: You have to define the variable clip_range_var...

Extensive Multiplayer tutorial:
http://mesetts.com/index.php?page=201