Montgomery Markland over at Rogue Dao Studios has posted some great information concerning custom terrain types:
I've been playing around with terrain textures, learning about how to properly format them with all of the assorted miscellany that's required.
I didn't know a .dds from a dvd until a week ago, so take all of this information as an exploratory process. Also, feel free to add your own comments.
Read the full post here:
http://www.roguedao.com/phpBB2/viewtopic.php?p=1428#1428