I thought of trying out Bryce7 for creating terrains in LE3 since we don't get the chunked-lod terrain we have in LE2 to go at first.
So here is my initial tests using a custom splat shader for RGB only. Bryce has an very advanced material generator so I think RGBA (4) or 2xRGBA (8) is within reach too (haven't tested yet)
Anyway here is my first try exported an 32k vertex mesh (fbx) from Bryce7 (it's not LE terrain, just a mesh)
Bryce7 is still free over at DAZ. (so go grab it)
1. Creating an heightmap using the advanced generators in Bryce
2. Setting up slope material to map RGB
3. Checking fast render in Bryce, colors seem mapped ok
4. Exported fbx and converted to gmf, applied my splat shader matching one texture per color repeated in the shader.
5. Walking around on the terrain in LE
5. Closeup of the ground (no normalmapping applied here yet)