I would rather start with something less ambitious as far as terrain goes. The most important part would be to get the flight simulation working - to see if your aerodynamics implementation is producing acceptable results, or if the general idea is simply too ambitious to achieve. This should ideally be done with stock asset locations - possibly with an airfield modified onto the ocean for take-off and landing tests - because they offer just as good an environment for testing the fundamental gameplay potential as a more historical, complete map would.
Once you know you have a solid base for the mechanics of flight down, you can get people to work on things like more aircraft and better locations.
As for the height map thing - you don't need to create a height map for every tile, no one does that. I would recommend using a basic high resolution height map (or, alternatively, something like SRTM* data directly without conversion to a texture) and adding details on generic tiles with fractal modifiers of some kind (the biggest problem you have is making sure each tile blends well to the adjacent tiles). That way, you would only need to craft hand-made height maps for special tiles, where you want to include particular elevation formations at higher detail.
* Shuttle Radar Topography Mission. Offers elevation data for the entire globe in 500 metres/pixel resolution. With suitable interpolation, that will already provide quite a detailed terrain mesh. If you want to get fancy, NASA also has bathymetry (ocean floor depth charts) available somewhere on their site...