I have now managed to fix the shadows and as part of this have moved on to using full dynamic global illumination. This has allowed me to implement a full day/night cycle.
I am now progressing with adding towns and cities to the map and further amounts of foliage. The video below shows the sunset, moving through the swamp, and around the wall at the edge of one of the larger cities;
In the future i plan to have rope walkways across the deeper sections of swamp to save the character having to walk whilst holding his breath (let's be honest here, you can't swim in armour!) and to improve the swamp foliage, replacing the trees with vines and floating detritus.
Next on my list, importing and creating LOD levels for approximately 100 building models, and associating the correct materials with them...