OK i have done what you wanted (as i have been pioneering this for a while)no ter2blend python script used
to texture a landscape using a texture from terragen you must.
set the rendersize of the terragen image to maximum. (i do 4000x4000)
remove all sky rendering and atmospheric colour distortion.
set everything to no shadows
camera position and target position to dead centre of terrain.
camera to the lowest posible postion to have evything in view (exactly/no bleck around the edge of the render)
after rendering texture save as BMP then convert to TGA. (4000x4000=45Megabytes)
using a terragen plugin export a DXF file of the landscape
import DXF -remove doubles and join as many pieces as possible.(you’ll understand if you do it)
create a plane that is exactly (exactly did i say that already) the size of the landscape from the top view. (delete one edge on this plane).
duplicate it so that there are the same number of planes as pieces of the landscape. join one plane to each piece(this is to get the texture to line up correctly)
now using you texture from terragen (load image)
–set emit to about .3-.4 (for the ambient light effect)
–let it recive shadows etc (for animations or still photos) (games would be different)
now set up the lighting and render in BLENDER.
check this out
RENDERED IN BLENDER 100% blender shadows
be warned for detail this good your .BLEND FILE will be 55Meg but if you use a simpler landscape and a smaller texture it will be fine.
i used a 4000x4000px texture and a 500,000 polygon mesh