hi

the terrain generator, what I really recommend to use is L3DT. it has a great free version, but you have to use heightmap to export from L3DT, and import to MED. it requires some tweaking to get the same heights as in L3DT (scale z), but works fine. textures also can be used fine, you can create a single skin, or a multi skin. in the latter case you have to export texture aplha-s from L3DT what you can use with the terraintex.fx, which works fine with 3DGS free.

in case of Terragen 1, the export import possibilities are the same, but I use it rather for sky cube creation (check my homepage for a tutorial). I have not really used Terragen 2 because it is not free, and a bit more complex to use.

another tool is PnP Terrain Creator, offering hmp export, thus no conversion required for 3DGS. it places the blended texture to the first skin, and the tiled textures with blending on alpha to further skins. it is not compatible with the default 3DGS terraintex.fx, but fine with my terraintex.fx modification I'm using in my editor. but it has no such a realistic result as L3DT or Terragen (or at least I was not able to achieve it).

there are some other tools like Earth Sculptor or Bryce, which are not so cheap but not better than L3DT free.

I hope it helped you.