The Terrain in Daeomica looks realy nice,
especially the way multitexturing, and lights work together.
Im sticking to the good old terrain though, since it gives a lot of advntages.
Namely that the shadow of animated Models works nice on it.
With Models as terrain, one would need stencil shadows, which is much
too slow.
Here is a way to make a normal Terrain look nice with some
shadows baked on it:

It would also work with lightsources that could be baked on it.
The main problem is, that this way it does not have a multitexture terrain.
I would need a new shader to mix baked shadows, and multitexture.
Models are a good way to go, but require much more effort, to implement right.