Looks like lots of good modders are polish here.
Ok, before you get the pics a few things I didn't have time for to write yesterday:
I'm somewhat worried about the lighting. I guess instead of having the tris straight up I'll probably scale the upper circle a bit up, this should probably give some better results. This could also make the whole background look more perspective, although I doubt this.
Another thing I'm worried about is that if there's an upward slope in the terrain on the transition to the outer terrain, it fades into the color of the sky.
Also, this could probably use a 2048x512 texture instead of 1024x256(hey, 2048x512 is just as big as a 1024x1024 texture!). Don't overrate this thing because it should only be used for very distant landscapes and mountainsides.
In the pics I didn't modify the outer terrain mesh, so you would have other mountains and generally a more interesting landscape in front of this thing.
A few comments to the pics:
Like I said, it's only a quick n dirty job -> it can look much better. The texture is tiled 3 times all around, so mayyybe, for a better resolution this could be tiled 4 times. Not too sure about that, though.
The light textures are mine. I know, from the castle view the terrain tiles horribly. I wanted to fix this some time...
Enough said, here are the pics.
About your idea with fog... The same thing could be done for skyboxes so you had a lot of fog on a rainy day and no fog on a sunny day.
EDIT:
Oh right, I forgot to say that those trees in the front shouldn't be there, at least not that big.