Thank you all for all the responses.

I was using a shader before to put the textures on the terrain, and i still had the problem with the textures getting stretched - Until I went into MED and sized the UV mapping up to a given size (usually at least 4096x4096). Is there some way to program a shader so that it is not dependant on the UV mapping of the model?

As for not being able to split up the UV mesh - it CAN be done, i've done it before. You select part of the model and go to eidt->create group, when you generate the atlas mapping, youll have two groups of meshes instead of one single mesh. I just cant figure out how to assign the groups to different skins.