World/Horizon Question : Real Button and options

I have been working on this scene this afternoon:

http://img223.imageshack.us/img223/7892/horizonbugblender3rr.jpg

The terrain is imported from Terragen and the texture was made from a 90 degree angle from terragen too. The picture is what I have so far in Blender but I am currently struggling with the sky. I finally found an option that resulted in little distortion and that worked correctly but I cannot get that darn grey line lower that the camera. I Want to keep the distance between the camera and the ground plane as it is. Is there a way to accomplish such a thing? Thanks

I noticed it is relative to the height of the camera.