So. I used an interactive online topo map that allows to click on a spot to find the height. I checked a number in-game heights and noted a systematic lowering commencing at around 60m and up. For example, some in-game heights (L) vs the correct values (R):
120 - 262
220 - 400
800 - 1100
I went through several iterations of applying a custom curve to map_H.tga, so as to boost the heights commencing just at the threshold of a bit below 60m. The curve set points I settled on, with input/output values:
20, 20
35, 35
64, 77
128, 148
191, 204
The two equal pairs in the lowest regime (for the lowest elevations) are to force a straight line, for no deviation. The curve is a smooth Bezier. The result is a much better match to reality, with all terrain except for the highest peaks near 4,000m looking more like the real thing.
It appears the hills at Port Moresby might have already been manually suppressed in the DEM image I obtained; I raised the heights with the unlocked FMB's height tool (the screenie below is from the unlocked FMB, and shows the marker pin that snaps to the nearest vertex.) As mentioned, the coarse grid of vertices does not permit fine-scale shaping of the topography. But I think this result is reasonably representative after comparing with photos of the city skyline.