The terrain is finally starting to look like..well.. terrain. With normal-based texture coordinate assignment and 3d texturing, the results are promising. The updated version is also up on my site, available for download, and in fact, I encourage you to try it and would appreciate any feedback.

The main problem was how to assign texture coordinates properly. Well, part of that solution was to use the Normal vector and the elevation of the vertex. If the terrain at that point was not approx. horizontal (based on the normal vector) then grass or snow cannot hold on to it, thus it's set to the rock texture.

The height is just used for determining how the horizontally-oriented faces are textured - with snow or grass. However, if only the height is used, then there's a clear cut-off for the switch, making it seem unnatural. So, I just added a (consistent) variance of +/- 100 m to the height, and the clear-cut line was dissolved.

The visibility remains ~1.5km, which is illustrated in the last screenshot. That mountain is 1km high.

I also increased the amount of detailed perlin noise (I use 2 perlin noise functions), which now generates some interesting looking formations, like the overhang and the archway seen below.

So, here are the screenshots: