Sorry, its not possible if your model file doesnt match MEDs idea of a regular grid.
You can create a regular terrain, convrt it to mdl, move vertices only in the z axis then reconvert to terrain again but once you move vertices in y grid, youve lost the regular pattern.
This feature is usefull if you import a model terrain from another application then converted it terrain I think but its never worked for me for tests I made from model to terrain directly in MED.

Terrain files have precalculated collisions added to them and only the z axis is manipulable.