Well, Kurt gave you the answer, so I can't take all of the cred

About the opacity map to feather the edges, it looks like you know how to do that, but make the ramp setting radial or circular (can't remember which) instead of the default linear.

That way it is more roundish, like a "typical" island.

Also make sure the transparency map is a "projection" in the Y axis, so it is aiming down over top of the island geometry.


On the topic of texturing, that's my shortfall as well, so I would suggest checking out any of our UV texturing video tutorials, as well as the docs to give you a better handle on making most any texture work with your island geometry.

Sorry I couldn't be of more help...