http://www.world-machine.com
I've used this before and it works awesome. It will input existing files (your old terrains, blurry shapes from your camera, etc.) and make them look exactly like real life mountains, canyons, valleys, lakes, etc. Will also manufacture its own terrain. It seems incapable of making unrealistic terrain lol. Terrain can be exported to mtm2 format. Takes a little getting used to the "plugging terrain devices into each other" design, but once you're past that it's very powerful. Check it out today!