I found this program mentioned on CGTalk.
SO, I thought i’d share the link with you blender fans!
http://students.washington.edu/sschmitt/world/
Windows executable only i’m afraid!
Looks rather cool though, it can export the terrain as a .tga file, or as terragen .ter file (import into blender using the terragen import script?)
Certainly looks like something to keep an eye on. 
laters
–
brian