The terrain as is would not be suitable for a game mesh…and making a heightmap from the image ( is iffy ) … But you could try Materialize to make the Normal and heightmaps… personally, I would take a flat plane subdivided and with a subdivision modifier and shrinkwrap it to the mesh you have already that would give you a better mesh to work with…you could then bake a Normal map from the Higher-res to this new one, and get going from there…
You might want to look at this, and see if this would be a better option for you…