Hey Loco... Looks like there's trouble in Oz...
The problem that you describe sounds like there is probably an issue with the terrain files themselves.
I have had much success using large terrains with the standard shaders and I have never seen such results.
Firstly, I wish that I could view your attached avi files but all I got was sound with no video.
In any case, from the description you've given, I wonder if you are using the alpha channels of your terrain skins?
Could there be a sort of bleeding caused by overlapping skin alphas?
Could you make one of your problem terrains available? I am willing to have a look and try to diagnose the problem...