I've done a ton of research since I first posted this question. Articles, PDF's, white papers, tech demos etc. have all helped me
get a better understanding of what the domain shader actually see's and what I have to work with in it.
I'm going to see if I can find a way to do this in the domain shader. (cracks are a fix-later problem) If I can't, that's fine too. I
have an excellent plan to use the geometry shader instead.
What I'd like to be sure of is the performance difference though. If I were to mimic the tessellation shader in the geometry
shader, would the geometry shader method operate slow-er enough to call it a big deal?
Have you inspected this PDF?
You could get what you want (terrain height) if you use displacement mapping and keep the equilateral tessellation.
EDIT: Also check out this video --- are these the kinds of triangles you want to end up with? http://www.youtube.com/watch?v=m73UVyKkyGQ