There are alot of ways to model terrain but one thing I just came across you might be interested in is a little plugin called DEM2TGA
which converts 1:250,000 scale (DEM) data and creates a TGA (Targa Image) files from it. You can download USGS geographic data (in DEM format) via the web to base your geometry on actual terrain, convert to TGA and use that in a displacement map.
Other than that, you could use the sculpt surfaces tool to push and pull geometry into shape.....or just model the geometry by hand. This all I can think of off the top of my head.
"Terminat Bora Diem, Terminal Auctor opus."