Has anyone tried if normal maps work for terrains?
In the case of water textures, there is a "Dot3" suffix after the filename and index number, as in "WaterNoise00Dot3.tga", for the normal map files. Normal maps would, possibly, have a few advantages compared to bump maps - the most important one being that they would not displace the surface, whereas a BumpH map will move the surface up or down which might result in a strange situation where the collision mesh is not exactly where the terrain surface is rendered.
I noticed this with my water mod (more pronounced than with stock water), but it isn't really a problem there since seaplanes float in the water rather than on top of it. With terrain it could be a very potent annoyance (I'm thinking of landing gear sinking in the ground or floating on top of it).
Actually now that I think about it, you can prevent the floating issue by never using colour darker than 50% grey (#808080 in hexcode) in the elevation map. And landing gear sinking to the ground might actually be useful in some cases, since it would look like the aircraft is on soft terrain - if only we had a way of making sure that the resistance is also appropriately increased in those locations, which would mean the aircraft would stop very fast (and probably rip its gear off or at least cause substantial damage).
This would be analogous to gravel traps used in modern airfields, which are installed for the explicit purpose of slowing down heavy aircraft that have landed long or veered off the runway. They are very efficient in bleeding energy. However I suspect such physics change cannot be easily done...