So in the end my curiosity got the better of me and I plumped for a month's plus subscription so I could check out HD terrain. When will I ever learn? N3V never fail to disappoint and it rarely takes more than a few minutes for that to happen. My first test was to put a section of track across a baseboard at an angle to the grid, and hit the "smooth terrain under spline" option. After waiting for what seemed like forever (probably a minute or so) the operation finally completed. Certainly the high resolution terrain conforms much more tightly to the track spline, but the LOD distance for the tessellation is so short that you can clearly see the embankment degrading under the track just a hundred metres or so from the camera. Half a baseboard away it basically just becomes a series of spikes. As you move your viewpoint along the track you can see the terrain morphing into it's final shape just a short distance away.
It amazes me that someone at N3V did an initial feasability test on this system and said "yes, I think this should be OK".
I honestly can't see how anyone would think this is an improvement over the existing system in it's current state. Certainly not worth the tradeoff with the 16 textures per baseboard limit.