Yes John well worth the try. Thanks for your efforts and keep us informed.
I followed your instructions and at least in TANE Build 90945, the displacement assets show as Type: Misc in Content Manager. (I remember in earlier versions of Trainz, they showed as Type GroundBrush as I recall) This means finding other's users displacements on the DLS is impossible unless you know the name/user. Not sure why N3V did that. So just create your own and give it a name meaningful to you and clone and follow John's instructions. The other thing I wanted to add is in World Machine, use the Height Output device to create the .tga file. I got an error message when trying to use the Bitmap Output device.
Anyone trying this should experiment with using various sizes (# baseboards) of terrain to create. The larger the selection, the more gradual the slopes. One disadvantage of using displacements to create terrain is that Trainz won't create altitudes of much over 300 meters even at the max displacement scale. Anyone know of a workaround let us know.