The "blend" (or whatever it is called) is for transition between terrain and a "skirt" terrain below it.

Then I would

1. Output a suitable alpha value from the shader. Whatever calculation you use for fog should do, just change the alpha instead.

2. Turn on alpha blending and see how it looks.

3. If you get sorting errors, swap alpha blend for alpha to coverage. See how it looks.

4. If the dithering is obvious, you will have to work out a sorting strategy and switch back to alpha blend.

And maybe post some screenshots. It's hard to visualise the scene without them.