ive only worked with ALE (Advanced Landscape Editor), L3DT, and a little bit with Terragen.

I was most impressed with L3DT. *Very* nice terrian effects editing. You can do erosion and such whatnot. The two downsides to it are that a) there is no 'official' version, the author is still developing it so the best you can get is an evaluation version, and b) it only saves in its own format and .x, its format isnt something that Gamestudio can use and the .x files it makes takes MED *forever* to open up.

ALE also impressed me. It took my hieghtmaps and made terrains out of them without much fuss. As well, the terrains werent 'stretched' or distorted like they can be with MED. You can also paint the skin right on to the terrain in the editor, something i found to be paticularly nice. The downside to ALE is that in the eval version you cant save so i have no idea if it saves to any format that can be imported to MED.

Terragen...well im not real sure what to say about it. Everyone else seems to love it. and some of the terrains ive seen made with it are truely awesome. However i found the software to be counter-intuitive and hard to learn. I'm sure its easy enough once you overcome the learning curve, but i just didnt have the patience for it.