I am basically doing the same thing as you are structure wise, only storing a heightfield of floats. It is very efficent. Saves memory and speed when reconstructing the faces.

In order to use this idea within a quadtree/octree setup I figured I would also need to store an offset (x,z) of where the node was in relation to the parent/world.

This still saves since you only have to store two more floats instead of 2xnumber of vertices.

So basically, store the starting point of the node in space (x,z) within the node, which should be easy to do at creation time.

Doing an indexed list of verticies with a face list is extreme overkill for a 2D heightfield.

"Five passengers set sail that day, for a three hour tour, a three hour tour...."

Thanks joviex, I figured it out.